NEW BUSINESS

As previously announced, our new business levels were £77.8m on a Present Value of New Business Premiums ("PVNBP") basis, down 9.2% from £85.7m in FY 2023. 

Despite the year-on-year reduction in new business, the level of PVNBP for the second half of the year was greater than the first half of the year, up 14.9% from £36.2m to £41.6m, reflecting increased sales of single premium business following the launch of the new portfolio bond in January. This is the first half-year on half-year increase in PVNBP since the second half of 2021. We continue to pursue opportunities to improve levels of new business.

Earlier this year we launched our new portfolio bond through Hansard Worldwide and announced the signing of a distribution agreement with Guardian Japan Kabushiki Kaisha ("Guardian") to distribute our two regulated products for the Japanese market, two initiatives that will position the Group for future growth.

TRADING RESULTS

IFRS profit before tax for the year was £5.3m, down from £5.9m in FY 2023. Excluding litigation defence costs and other non-recurring provisions, underlying profit was £8.5m compared with £7.4m in FY 2023. 

Fee and commission income was £48.8m for the year (FY 2023: £45.7m) with increased transaction-based income in Hansard International and Hansard Worldwide.

Income on shareholder investments was £4.7m for the year (FY 2023: £3.5m), with a continued focus on leveraging Group cash balances to maximise returns.

Administrative and other expenses were £33.3m for the year (FY 2023: £29.0m). The Group maintained tight control over general operational overheads and expenses despite inflationary pressures, with targeted investment to generate opportunities for future growth and the commencement of depreciation following the implementation the new policy administration system.

Value in Force ("VIF") is a measure of the future profits expected to be generated from the business. It discounts future expected shareholder profits reduced for the cost of holding the capital required to support the business.  VIF totaled £110.8m as at 30 June 2024 compared to £124.4m at 30 June 2023. This reduction has primarily arisen because the profits earned during the year are higher than the expected future profits on new business written during the year. We have also revised some assumptions with regards to future policyholder behaviour and expenses which have negatively impacted the VIF.

Assets under administration were £1.15bn as at 30 June 2024, up from £1.10bn at 30 June 2023.

policyholder LITIGATION

The Group continues to manage carefully its litigation exposures relating to the legacy operations.  We continue to believe we have strong defences against the claims being made. 

Contingent liabilities arising out of outstanding writs were £20.2m as at 30 June 2024 compared to £22.4m as at 30 June 2023. 

During the year the Group successfully defended eight cases with net exposures of approximately £1.3m, five of which may be appealed by the plaintiffs. These successes continue to affirm confidence in the Group's legal arguments. Our policy is to maintain contingent liabilities even where we win cases in the court of first instance if such cases have been subsequently appealed. 

OUTLOOK

Although the external environment remains challenging, we have progressed strategic and tactical initiatives. The launch of the new portfolio bond, the new Japanese proposition, and other products currently in development, present significant new opportunities for sales. We expect the recent trend of increasing PVNBP to continue as our new propositions gain momentum, noting that it takes a significant period of time for sales to generate a material change in IFRS profits given the long-term nature of our business, where profits are recognised over the life of a contract, so new sales contribute positively to profitability over a number of years.

The implementation of the new policy administration system has given the Group the platform required for expansion in the coming years and will facilitate a simpler approach to product development in future.

Following the implementation of the system, we have commenced the depreciation charges in the income statement. 2025 will be the first financial year where we will see a full year's depreciation charge, which will amount to a cost of £1.6m. Although this will reduce the published IFRS profit, the system development is no longer a cash cost to the Group.

We expect to be able to take actions in the next financial year to deliver costs savings from efficiencies arising from the new system, with the benefit to IFRS profit realised from the following financial year onwards.

The business continues to make targeted investments in new product offerings, to build on the product developments already delivered, and to ensure the Group is well positioned for the future. In financial year 2025, the Group expects to incur modest development costs, which are expected to be expensed as incurred.

Considering the above factors, we expect a short-term decline in the profitability of the Group measured using IFRS in financial year 2025, before recovering in 2026.

However, the Group has no external debt and the Group's regulatory solvency cover, a key measure used to assess dividend-paying capability, is calculated primarily on the basis of non-IFRS measures and is expected to remain strong.

We look forward to reporting further progress in due course.

DIVIDENDS

The Board has proposed a final dividend of 2.65p per share, the same level as last year. 

This dividend, if approved by the shareholders at the Annual General Meeting on 13 November 2024, represents a total dividend of 4.45p (2023: 4.45p) per share in respect of the financial year. Upon approval, the dividend will be paid on 14 November 2024 to shareholders on the register on 4 October 2024. The associated ex-dividend date is 3 October 2024.

HALF-YEARLY RESULTS

The results for the half-year are expected to be published on 6 March 2025.

 

 

For further information:

Hansard Global plc                                                                  +44 (0) 1624 688 000

Thomas Morfett, Group Chief Executive Officer

& Chief Financial Officer

 

Email: [email protected]

 

Camarco                                                                                  +44 (0) 7990 653 341

Ben Woodford, Hugo Liddy

 

Notes to editors:

·      Hansard Global plc is the holding company of the Hansard Group of companies. The Company was listed on the London Stock Exchange in December 2006. The Group is a specialist long-term savings provider, based in the Isle of Man.

·      The Group offers a range of flexible and tax-efficient investment products within a life assurance policy wrapper, designed to appeal to affluent, international investors.

·      The Group utilises a controlled cost distribution model via a network of independent financial advisors, and the retail operations of certain financial institutions who provide access to their clients in more than 170 countries. The Group's distribution model is supported by Hansard OnLine, a multi-language internet platform, and is scalable.

·      The principal geographic markets in which the Group currently services contract holders and financial advisors are the Middle East & Africa, the Far East and Latin America.  These markets are served by Hansard International Limited and Hansard Worldwide Limited.

·      Hansard Europe dac previously operated in Western Europe but closed to new business with effect from 30 June 2013.

·      The Group's objective is to grow by attracting new business and positioning itself to adapt rapidly to market trends and conditions. The scalability and flexibility of the Group's operations allow it to enter or develop new geographic markets and exploit growth opportunities within existing markets often without the need for significant further investment.

Forward-looking statements:

This announcement may contain certain forward-looking statements with respect to certain of Hansard Global plc's plans and its current goals and expectations relating to future financial condition, performance and results. By their nature forward-looking statements involve risk and uncertainties because they relate to future events and circumstances which are beyond Hansard Global plc's control. As a result, Hansard Global plc's actual future condition, performance and results may differ materially from the plans, goals and expectations set out in Hansard Global plc's forward-looking statements. Hansard Global plc does not undertake to update forward-looking statements contained in this announcement or any other forward-looking statement it may make. No statement in this announcement is intended to be a profit forecast or be relied upon as a guide for future performance.

 

This announcement contains inside information which is disclosed in accordance with the Market Abuse Regime.

 

Legal Entity Identifier: 213800ZJ9F2EA3Q24K05

 

Chairman's Statement

Introduction

I am pleased to present the Group's annual report for the financial year ended 30 June 2024.

Whilst the external environment for new business remains challenging, we have continued to invest and position our business for the long-term and have successfully progressed key strategic and tactical initiatives during the year. These include the launch of our new portfolio bond through Hansard Worldwide in January, and the signing of the distribution agreement with Guardian Japan Kabushiki Kaisha ("Guardian") in June, two initiatives that will position the Group for future growth. In addition, the implementation of our new policy administration system was completed during March, representing the culmination of a major strategic initiative that we expect to benefit our policyholders, distribution partners, and Group performance through enhanced operational efficiency, increased scalability, and cost savings.

We have developed two new regulated products for the Japanese domestic market, available to Japan resident investors looking to access a wide range of international funds via our award-winning online platform. The Board and I remain confident in the future opportunities for the business.

Graham Sheward retired from the Board with effect from 2 August. I thank Graham for his time with the Group, during which significant progress was made with the achievement of long-standing strategic objectives, and I wish him the very best for the future. Thomas Morfett has accepted the role of Chief Executive Officer, and the Board is in advanced discussions with a strong candidate for the role of Chief Financial Officer. Christine Theodorovics stepped down from the Board on 29 February following her appointment as CEO of Baloise Luxembourg, and I would like to thank Christine for her advice and candour during her tenure.

The Company is committed to increasing diversity at board level.  Supported by an independent executive search firm we are in the process of appointing two experienced female Independent Non-executive Directors to the Board.  The first appointment is Noel Harwerth OBE, who was appointed to the Board on 23 September, and we expect to announce the second appointment later in the calendar year.

Financial performance

Our IFRS profit before tax for the year was £5.3m, down from £5.9m in 2023. 

Fees and commissions increased by £3.1m to £48.8m for the year (2023: £45.7m), with improved transactional income in Hansard International and Hansard Worldwide.

Returns on group investments improved to £4.7m for the year (2023: £3.5m) as a result of the Group increasing its focus on cash and liquidity management.

Administrative and other expenses were £33.3m for the year, compared to £29.0m in 2023, as the Group positions itself for future growth and development.

Further detail and analysis are contained in the Business and Financial Review on pages 11 to 21.

New business

New business for the 2024 financial year was £77.8m (using the PVNBP metric), down 9.2% from £85.7m in 2023. Going forwards, our refreshed product portfolio will present new opportunities for the business to increase sales.

We are continuing to pursue further opportunities to improve new business levels as outlined in the Business and Financial Review.

Capitalisation and solvency

The Group remains well capitalised to meet the requirements of regulators, contract holders, intermediaries, and other stakeholders.

On a risk-based capital basis, total Group Free Assets in excess of the Solvency Capital Requirements of the Group were £39.4m (2023: £44.6m), a coverage of 149% (2023: 156%). We have maintained our prudent investment policy for shareholder assets, which minimises market risk and has provided a stable and resilient solvency position over many years and economic cycles.

Dividends

The Board has resolved to pay a final dividend of 2.65p per share (2023: 2.65p).  In making this decision, the Board has carefully considered its current and future cash flows, the risks and potential impact of the global economic situation, the outlook for future growth and profitability and the views of key stakeholders, including shareholders and regulators. 

The dividend is subject to approval at the Annual General Meeting.  If approved, this will represent total dividends for the financial year of 4.45p per share (2023: 4.45p).  Upon approval, the final dividend will be paid on 14 November 2024. The ex-dividend date will be 3 October 2024 and the record date will be 4 October 2024.

Looking forward

The Company's investment in new systems and products, which are focused on satisfying customer needs, delivered higher sales in the second half of the financial year ended 30 June 2024, and we expect to see a continuation of this increased demand for our products in the year to 30 June 2025. This will position the Group well for the future. While we will maintain our focus on targeted cost savings to offset the impact of inflation and increased depreciation, we expect to see a short-term decline in the Group's IFRS profit next year. The Company's solvency, however, is forecast to remain strong. Further detail is contained in the Future Prospects section on page 16.

 

 

Philip Kay

Chair

25 September 2024

 

 

 

GROUP CEO REVIEW

I am delighted to present my first report as Group CEO. We have delivered stable financial results for the year despite continued economic headwinds and challenges with our target markets. We have continued to maximise returns on Group cash and have positioned the business for future growth through controlled expenditure on strategic initiatives.   

In March we successfully completed the implementation of our policy administration system which we expect to deliver efficiency gains and costs savings in future.

We announced in June that Hansard International has signed a distribution agreement with Guardian in Japan. This represents an important initial step in the realisation of our long-term strategy associated with our Japanese investment management licenceand is testament to the dedication and perseverance of our staff and colleagues around the world. Guardian is led by a management team with a wealth of experience in Japan and will promote and distribute our two new Japanese-regulated products to the domestic market via our award-winning online platform.  We will continue to focus on revitalising our product pipeline following the launch of our new portfolio bond through Hansard Worldwide earlier this year. 

The company has maintained tight control of operational costs during the period, while targeting spending on future strategic initiatives. Cost savings are expected to be achieved from the efficiencies introduced by the new system during the upcoming financial year, although these will be partially offset by the amortisation of costs associated with the development of the system.  We have been able to maintain the quantum of the dividend we pay to shareholders, whilst building the foundations for future growth in our business.

At the October 2023 International Investment awards, we received further recognition for the level of service provided to our clients and advisers with the Excellence in Client Service (Africa region) and Excellence in Fintech awards.

I would like to thank the Executive Committee and Hansard Group colleagues, who have demonstrated a high level of determination and purpose to progress and deliver on our key strategic and tactical initiatives this year. During this challenging period our employee engagement results have remained broadly consistent which is testament to our people and their resilience. Whilst we are beginning to see the fruit of our work there remains much to do, and I am committed to continuing the journey with my colleagues throughout the Group.   

RESULTS FOR THE YEAR UNDER REVIEW

I draw your attention to the following items below. Additional information is contained in the Business and Financial Review on pages 11 to 21.

1.         New business distribution

New business for the 2024 financial year was £77.8m (using the PVNBP metric), down 9.2% from £85.7m in FY 2023. Despite the year-on-year reduction in new business, more PVNBP was sold during the second half of the year than the first, up 14.9% from £36.2m to £41.6m, reflecting increased sales of single premium business following the launch of the new portfolio bond in January. This is the first half-year on half-year increase in PVNBP since the second half of 2021. We continue to pursue opportunities to improve levels of new business as outlined in the Business and Financial Review.

2.         Operational, Business and Financial Risks

Our business model involves the acceptance of risk on a managed and controlled basis. The Group's Enterprise Risk Management ("ERM") Framework continues to provide for the identification, assessment, management, control and reporting of current and emerging risks, recognising that systems of internal control can only provide reasonable and not absolute assurance against material misstatement or loss. The Group's internal control and risk management processes have operated satisfactorily throughout the year under review, with the benefit of iterative enhancements as we continue to embed our approach and benefit from the relative maturity of the ERM Framework.  

2.1        Litigation Risk

As explained more fully in the Business and Financial Review, we continue to manage complaints and litigation arising from our closed book, Hansard Europe dac, where the assets linked to contracts written before 2014 have fallen in value or become illiquid. Hansard does not and did not give investment advice and was not therefore party to the selection of policy assets, and we maintain that such claims have no merit against Hansard.

As at 30 June 2024, the Group had been served with writs with a cumulative net exposure totalling €24.3m, or £20.6m in sterling terms (30 June 2023: €26.1m / £22.4m) arising from contract holder complaints and other asset performance-related issues.

3.         Hansard OnLine

Our award-winning technology 'Hansard OnLine' (used by independent financial advisers ("IFAs")) and 'Online Accounts' (used by clients) are key aspects of our proposition and an integral part of the Group's operating model that allows us to better service IFAs and clients, embed process efficiencies and be flexible in operational deployment.

In March 2024, Hansard OnLine and Online Accounts were successfully migrated to a new system environment, marking the culmination of a major strategic objective that enables us to build on an already award-winning, online proposition. In addition, the new platform will be central to the development and quick deployment of new products going forwards. Further information concerning Hansard OnLine is set out in the Business and Financial Review on pages 11 to 21.

4.         Operating cash flows and dividends

The Group generates operating cash flows to fund investment in the business, new business origination and to support dividend payments.

As outlined in the Cash Flow analysis section of the Business and Financial Review, the Group generated £3.0m in overall net cash inflows before dividends (2023: outflows of £1.6m), after commission and other new business acquisition costs of £8.1m (2023: £8.5m) and the investment of £3.9m (2023: £6.6m) in IT software and equipment expenditure. Dividends of £6.1m were paid in the financial year (2023: £5.9m).

A final dividend of 2.65p per share has been proposed by the Board and will be considered at the Annual General Meeting on 13 November 2024.  If approved, this will represent total dividends for the financial year of 4.45p per share (2023: 4.45p).

FINANCIAL PERFORMANCE

Results for the year

Financial performance is summarised as follows. A detailed review of performance is set out in the Business and Financial Review that follows this report.

 

 

 

	FY 2024	FY 2023
	£m	£m
New business sales - PVNBP	77.8	85.7
IFRS profit before tax	5.3	5.9
Underlying IFRS profit	8.5	7.4
Assets under Administration	1,150.9	1,101.5
Value of In-Force (regulatory basis)	110.8	124.4

 

IFRS results

IFRS profit before tax for the year was £5.3m, compared with £5.9m in 2023.  After eliminating litigation and non-recurring items, as shown on page 13, the underlying IFRS profit (a non-GAAP metric) was £8.5m, up from £7.4m in 2023.

Fees and commissions were £48.8m for the year (2023: £45.7m). Fees from Hansard International and Hansard Worldwide were up £2.9m to £46.5m from 2023, reflecting an increase in activity-based fees. Income from our closed book, Hansard Europe dac, increased marginally prior year.

Returns on group investments increased to £4.7m (2023: £3.5m) as the Group took advantage of continued higher yields on bank deposits.

Administrative and other expenses were £33.3m for the year, compared to £29.0m in 2023, as we have targeted additional investment to provide capacity and capability for growth.

Origination costs to acquire new business of £16.1m is marginally down on the 2023 result (£16.2m). Origination costs incurred in the year in respect of new business decreased to £10.3m (2023: £11.5m). Net amortisation of deferred origination costs increased to £5.8m (2023: £4.7m).

Further details and analysis are contained in the Business and Financial Review on pages 11 to 21.

Capitalisation and solvency

Our key financial objective is to ensure that the Group's solvency is managed safely through the economic cycle to meet the requirements of regulators, contract holders, intermediaries, and shareholders. The Group continues to be well capitalised.

Under risk-based capital methodologies, total Group Free Assets in excess of the Solvency Capital Requirements of the Group were £39.4m (2023: £44.6m), a coverage of 149% (2023: 156%).  Shareholder assets are typically held in a wide range of deposit institutions, investment grade corporate bonds, and highly rated money market liquidity funds. This prudent investment policy for shareholder assets minimises market risk and has provided a stable and resilient position over recent years.

our people

Our people remain critical to our success, and I would like to recognise and reiterate my thanks to each of my colleagues for their continued commitment, flexibility, and resilience in managing both our on-going day-to-day operations and our key strategic projects. 

I have been delighted by the consistent level of engagement seen within our programme of cultural change and look forward to continuing in our goals of fostering an engaged and innovative workforce to meet our ambitions and the expectations of our stakeholders.

THE YEAR AHEAD

The global economic situation remains challenging, with residual pressures from high inflation and economic uncertainty continuing to cause hesitancy amongst our target clients and with declining interest rates expected to reduce opportunities for returns on group investments in the coming year. We will continue to target cost savings to help mitigate the impact of inflation in previous years, along with the impact of increased depreciation costs. Our investment in new products and systems has delivered higher sales in the second half of the year, and we expect to see increased demand for our products focused on satisfying customer needs, positioning us well for the future.

 

 

Thomas Morfett

Group Chief Executive Officer

25 September 2024

OUR BUSINESS MODEL AND STRATEGY

Our Business Model and Strategy

Hansard is a specialist long-term savings provider that has been providing innovative financial solutions for international clients since 1987. We focus on helping our customers with savings and investment products in secure life assurance wrappers to meet their long-term savings and investment objectives.

We administer assets in excess of £1 billion for just under 40,000 client accounts around the world.

We believe that the following areas are fundamental for the continued success of the Group:

·      Proposition enhancement, product improvement and diversification of our distribution channels to enable generation of significant flows of new business from identified target markets.

·      Leveraging our policy administration system to drive business efficiency.

·      Proactively managing our cash flows through the cycle to fund the appropriate balance of investment in new business and dividends.

·      Managing and mitigating our exposure to business risks.

·      Positioning ourselves to incorporate increasing levels of regulation into our business model.

 

Business Model

The Company's head office is in Douglas, Isle of Man, and its principal subsidiaries operate from the Isle of Man, The Bahamas and the Republic of Ireland. 

Hansard International is authorised by the Isle of Man Financial Services Authority and has a branch in Malaysia, authorised by the Labuan Financial Services Authority, to support business flows from Asian growth economies. The Company also has a branch in Japan to support its Japanese proposition, which is authorised by the Japanese Financial Services Agency. Through its relationship with a local insurer in the UAE, Hansard International reinsures business written in the UAE.

Hansard Worldwide underwrites international and expatriate business around the world. It is authorised by the Insurance Commission of The Bahamas.

Hansard Europe is authorised by the Central Bank of Ireland. Hansard Europe ceased accepting new business with effect from 30 June 2013.

Our products are designed to appeal to affluent international investors, institutions, and wealth-management groups. They are distributed exclusively through independent financial advisers (IFAs) and the retail operations of financial institutions.

Our network of Regional Sales Managers provides local language-based support services to independent financial advisors in key territories around the world, supported by our multi-language online platform, Hansard OnLine.

Vision and Strategy

Our vision for the Hansard Group is:

 

"to share success with our clients by providing simple, understandable and innovative financial solutions".

 

To deliver this vision, client outcomes will be the central focus within our business and, consequently, we will seek to evolve all aspects of our products, processes, and distribution in order to constantly improve.

 

Our talented people are the foundation of our business. We have created an empowering culture, which values innovation, quality, integrity, and respect.

 

Our strategy to improve, grow and future-proof our business will be delivered through three key areas of strategic focus:

 

i.        Improve our business:  We will improve customer outcomes through the introduction of new and innovative next generation products and services to improve our competitiveness, focusing on the quality of the IFAs with whom we work and continuing to drive the engagement of our people within our business.

 

ii.       Grow our business:  In recent years we established a new life company in The Bahamas, and we have recently signed a distribution agreement with Guardian to access the Japanese domestic market. We will continue to seek out opportunities for additional distribution channels in other targeted jurisdictions in future.

 

iii.      Future-proof our business: We actively consider new and innovative technologies, propositions, and business models.  It remains critical to support the online and digital needs of our clients alongside improving organisational efficiency and scalability.

 

Products

The Group's products are unit-linked regular or single premium life assurance and investment contracts which offer access to a wide range of investment assets. The contracts are flexible, secure and allow life assurance cover or other features depending upon the needs of the client. The contract benefits are directly linked to the value of assets that are selected by, or on behalf of, the client. The Group does not offer investment advice. Contract holders bear the investment risk.

The Group's products do not currently include any contracts with financial options and/or guarantees regarding investment performance and hence the Group carries no investment guarantee risk that can cause capital strain.

As a result of high levels of service, the nature of the Group's products, the functionality of Hansard OnLine, and the ability of the contract holder to reposition assets within a contract, we aim to retain the contract holder relationship over the long term.

Contract holder servicing and related activities are performed by Hansard Administration Services Limited, which is authorised by the Financial Services Authority of the Isle of Man Government to act as an Insurance Manager to insurance subsidiaries of the Group.

Revenues

The main sources of income for the Group are the fees earned from the administration of insurance contracts. These fees are largely fixed in nature and amount to £43.7m (2023: £40.5m). Approximately 30% of the Group's revenues, under IFRS are based upon the value of assets under administration.

From this income we meet the overheads of the business, invest in our business, remunerate our distribution network, and pay dividends.

Managing Risk

Risk can arise from a combination of macro events and company-specific matters.  In the external environment the ongoing geopolitical position and active hostilities, combined with continued economic uncertainties, cost of living pressures, accelerating technological change, climate adaptation efforts and broader societal vulnerabilities have the potential to cause significant volatility to stock markets, foreign exchange markets, interest rates and expense inflation and the capacity to impact our strategic initiatives, business plans and operating resilience.  We therefore continue to maintain a robust, low risk balance sheet and remain committed to iterative development and enhancement of our enterprise risk management system and controls. We believe this prudent approach to our governance, risk management and internal arrangements remains appropriate to meet the requirements of regulators, contract holders, intermediaries, and shareholders.

Further details of our approach to risk management, and the principal risks facing the Group, are outlined in the Risk Management and Internal Control Section at pages 22 to 30.

Hansard OnLine

 

Hansard is a regular recipient of numerous awards that recognise our reputation for innovation, via the provision of market-leading online platforms that are used daily by thousands of IFAs ('Hansard OnLine) and their clients ('Online Accounts) around the globe. In March 2024, Hansard OnLine and Online Accounts were successfully migrated to a new system environment, marking the culmination of a major strategic objective that enables us to build on an already award-winning, online proposition. In addition, the new platform will be central to the development and quick deployment of new, future products.

 

 

Online Accounts

 

Thousands of existing Hansard clients access their own personal, secure online account every year. Online accounts are mobile friendly and have the capability to provide these clients with a wealth of policy information, 24/7. In addition to other functionality and benefits, clients can:

·        Track the performance of their policy online, with policy valuations and contribution details at the touch of a button.

·        Access their online account with our new-look mobile and tablet friendly platform, enabling access on the go, wherever they are in the world.

·        Access their online account 24/7, safe in the knowledge that their details are secure and protected.

·        Access a wealth of fund performance information, facilitating better informed investment decisions in the future; and

·        Stay informed in a language that they understand, with Online Accounts being available in over 13 different languages.

Excellent Customer Service

We strive to provide excellent customer service to our clients and their IFAs.  We have won several external awards over the years, most recently in October 2023 when we won 'Excellence in Client Service - Industry (Africa region)' and 'Excellence in Fintech' awards from International Investment. We also maintained our five-star rating for Customer Service by AKG Financial Analytics, in their 2023 review.

Cyber Security

Hansard has continued to invest in its cyber security infrastructure with the implementation of a Security Operations Centre, operating at an ISO27001 (Information Technology Security Standard) standard, to provide further enhanced surveillance of our systems and external threats.

Strategy DEVELOPMENT

Our current strategy has three main aims:

i)          To capitalise on near term strategic opportunities.

ii)          To ensure the Group is well positioned to respond and adapt to regulatory change and development; and

iii)         To consider and plan for longer term industry and technological evolution.

During the past financial year, we have progressed our two most significant near-term strategic initiatives:

·      implementation of our policy administration system, and upgrading and streamlining our systems and IT infrastructure; and 

·      signing a distribution agreement with Guardian enabling us to bring to market our locally licensed investment products in Japan.

We continue to make progress with further development to refresh our suite of products.

 

Regulatory change

The Isle of Man Financial Services Authority (the Authority) has continued to focus on its programme of transformational change and commitment to driving regulatory effectiveness, maintaining a robust regulatory environment, and keeping pace with international standards. The Island's reputation as a well-regulated and internationally responsible jurisdiction remains of vital importance to its competitive positioning in the global marketplace and maintaining consumer confidence in the Island's financial services sector. The Authority's strategic priorities are also closely aligned with the Isle of Man Government's vision to build a secure, vibrant, and sustainable Manx economy.

The Authority's revised Supervisory Methodology Framework actively supports the achievement of its core regulatory objectives namely the protection of customers, reducing financial crime and maintaining confidence in the financial services sector. Supervisory emphasis remains focused on the delivery of outcomes that enhance the Island's status and reputation and a high level of compliance with international standards.  Major milestones have been enacted in recent years with the implementation of new risk-based capital, conduct and governance regimes. The Authority's transition to a risk and impact-led supervisory model is testament to its continued drive for better outcomes via consistent, proactive and value-adding programmes of engagement, which deploy regulatory resources in the most appropriate and efficient way.

Throughout the reporting period the Hansard Group has continued its work to adapt to and embrace the intent and objectives of regulatory change and development, working transparently with all the Group's regulatory bodies to shape our responses and embed associated changes in strategy, policy, practice and culture.

Key performance indicators

The Group's senior management team monitors a wide range of Key Performance Indicators, both financial and non-financial, that are designed to ensure that performance against targets and expectations across significant areas of activity are monitored and variances explained.

The following is a summary of the key indicators that were monitored during the financial year under review.

New Business - The Group's internal indicator of calculating new business production, Net Issued Compensation Credit ("NICC") reflects the amount of base commission payable to intermediaries, excluding override commission. Incentive arrangements for intermediaries and the Group's Regional Sales Managers incorporate targets based on NICC (weighted where appropriate).  New business levels are reported daily and monitored weekly against target levels.  Net Issued Compensation Credit was £5.6m for the year, down £0.1m on 2023, reflective of lower new business levels.
Administrative Expenses (excl. litigation and non-recurring items) - The Group maintains a rigorous focus on expense levels and the value gained from such expenditure. The objective is to develop processes to restrain increases in administrative expenses to the rates of inflation assumed in the charging structure of the Group's policies.   The Group's administrative and other expenses for the year (excl. litigation and non-recurring items) were £25.0m compared to £22.3m in 2023. Further detail is contained in the section on Administrative and other expenses on page 15.
Cash - Bank balances and significant movements on balances are reported monthly. The Group's cash and deposits at the balance sheet date were £65.0m (2023: £65.4m). Movements are reflective of cash earned from new and existing business, commissions and expenses paid, investments in new systems, the level of inflight transactions, and the dividends paid to shareholders.
Operational Resilience - Maintenance of continual access to data is critical to the Group's operations. This has been achieved throughout the year through a robust infrastructure. The Group is pro-active in its consideration of threats to data, data security and data integrity. Business continuity and penetration testing is carried out regularly by internal and external parties.  Operational Resilience is further evidenced by ongoing remote working as a normal business practice.
Risk profile - The factors impacting on the Group's risk profile are kept under continuous review. Senior management review actual and emerging risks at least monthly. The principal risks faced by the Group are summarised in the Principal Risks section below.
Solvency - The Solvency Capital Requirement ("SCR") of the Group and its' subsidiaries is monitored frequently and reported to the Board. The SCR as at 30 June 2024 is reported in Other Information on page 143.

 

business AND FINANCIAL REVIEW

 

NEW BUSINESS PERFORMANCE FOR THE YEAR ENDED 30 JUNE 2024

 

The Group continues to focus on the distribution of regular and single premium products in a range of jurisdictions around the world, achieving well diversified new business growth.

 

New business performance for the year is summarised in the table below:

 

	2024	2023	%
Basis	£m	£m	change
Present Value of New Business Premiums	77.8	85.7	(9.2%)
Annualised Premium Equivalent	10.4	12.7	(18.1%)

 

In Present Value of New Business Premiums ("PVNBP") terms, new business for the year to 30 June 2024 was £77.8m, 9.2% down on the prior year. Despite the year-on-year reduction in new business, more PVNBP was generated during the second half of the year than the first, up 14.9% from £36.2m to £41.6m, reflecting increased sales of single premium business following the launch of the new portfolio bond in January. This is the first half-year on half-year increase in sales measured with PVNBP since H2 2021. New business PVNBP in the second half of 2023 was £42.3m.

 

The Annualised Premium Equivalent ("APE") measure shows a decline of 18.1% from 2023 to £10.4m.

Present Value of New Business Premiums

New business flows on the PVNBP basis for the Group are further analysed as follows:

	2024	2023	%
PVNBP by product type	£m	£m	change
Regular premium	44.2	55.7	(20.7%)
Single premium	33.6	30.0	11.9%
Total	77.8	85.7	(9.2%)
	2024	2023	%
PVNBP by region	£m	£m	change
Middle East and Africa	32.4	42.4	(23.6%)
Rest of World	24.3	25.7	(5.8%)
Latin America	16.4	12.1	35.6%
Far East	4.7	5.5	(14.8%)
Total	77.8	85.7	(9.2%)

 

The launch of our new single premium proposition was well received, and we saw an increase in business for this product over the second half of the year that we expect to continue in future. We expect the launch of new regular premium products through our new distribution agreement with Guardian in Japan to lead to improvements in regular premium sales in the current business year. A refresh of our regular premium product range for the wider distribution channels is also expected in the next financial year which will further support and underpin our production for the year ahead.

Activities around new business generation remain high as we work with key IFAs around both existing and new opportunities. Several new IFA relationships have already started producing business and this work will continue in the current business year to expand further our networks of distributors.

Our sales team is well positioned to drive IFA and product initiatives to increase new business in future. This includes the development and launch of new products for key target markets, updates and improvements to existing products and continuation of system developments to support our service and overall proposition.

Premium currencies remained relatively consistent year on year, with the predominant currency being US Dollars:

 

	2024	2023
Currency denominations (as a percentage of PVNBP)	%	%
US dollar	85	87
Sterling	10	8
Euro	4	4
Other	1	1
	100	100

 

 

 

Presentation of financial results

 

Our business is long term in nature. The nature of the Group's products means that new business flows have a limited immediate impact on current earnings reported under UK adopted international accounting standards ("IFRS"), as initial fees and acquisition costs from the contracts sold are mostly deferred and amortised over the life of the contract. The benefit of sales to fee income levels are felt in future financial periods, noting also that our newer products have a longer earning period than our older products.

Results for the year

The following is a summary of key items to allow readers to better understand the results for the year.

IFRS profit before tax for the year was £5.3m, compared with £5.9m in 2023.  Increased fee income and higher investment returns have been offset by an increase in administration expenses.

Operating profit prior to litigation and non-recurring items was £8.5m in 2024, up from £7.4m in 2023.

Abridged consolidated income statement

The consolidated statement of comprehensive income presented under IFRS reflects the financial results of the Group's activities during the year. This income statement however, as a result of its method of presentation, incorporates a number of features that might affect an understanding of the results of the Group's underlying transactions. These relate principally to:

·      Investment gains attributable to contract holder assets were £114.4m (2023: £40.6m). These assets are selected by the contract holder or an authorised intermediary, and the contract holder bears the investment risk. They are also reflected within 'Change in provisions for investment contract liabilities' and together have no net impact on IFRS profit.

·      Fund management fees are collected and paid onwards by the Group to third parties having a relationship with the underlying contract. In 2024 these were £5.1m (2023: £5.2m). These are reflected on a gross basis in both income and expenses under the IFRS presentation on page 94. Deducting the £5.1m from £48.8m for fees and commissions and £33.3m for administrative and other expenses in the consolidated statement of comprehensive income results in the figures of £43.7m and £28.2m presented below.

	2024	2023
	£m	£m
Fees and commissions attributable to Group activities	43.7	40.5
Investment and other income	5.9	5.4
	49.6	45.9
Origination costs	(16.1)	(16.2)
Administrative and other expenses attributable to the Group, before
litigation and non-recurring items	(25.0)	(22.3)
Operating profit for the year before litigation and non-recurring items	8.5	7.4
Litigation and non-recurring expense items	(3.2)	(1.5)
Profit for the year before taxation	5.3	5.9
Taxation	(0.1)	(0.2)
Profit for the year after taxation	5.2	5.7

An abridged non-GAAP consolidated income statement in relation to the Group's own activities is presented below, adjusted for the items of income and expenditure indicated above.

 

 

Fees and commissions

Fees and commissions for the year attributable to Group activities were £43.7m, 7.9% higher than the 2023 total of £40.5m.

Contract fee income totalled £30.6m for the year, up £2.5m on the 2023 comparative of £28.1m.  Contract fee income includes the amortised element of up-front income deferred under IFRS and contract-servicing charges.  Amortisation of deferred income in Hansard International increased to £17.4m, whilst transactional charges related to policyholder activity have increased to £13.2m compared to last year. Immediately recognised fees, including surrender charges from redemptions, decreased compared to the prior year.  This was reflective of lower levels of redemptions compared to the prior year.  Hansard Europe dac, which closed to new business in 2013, saw a marginal increase in contract fee income to £2.2m (2023: £2.1m) as a result of higher transactional income and fund management fees.

Fund management fees accruing to the Group and commissions receivable from third parties totalled £13.1m (2023: £12.4m). Such fees are related directly to the value of assets under administration and are affected by market movements, currency rates and valuation judgements. 

A summary of fees and commissions is set out below:

	2024	2023
	£m	£m
Contract fee income	30.6	28.1
Fund management fees accruing to the Group	8.3	7.7
Commissions receivable	4.8	4.7
	43.7	40.5

 

 

 

Included in contract fee income is £17.4m (2023: £16.8m) representing the amortisation of fees prepaid in previous years, as can be seen in the analysis set out below:

	2024	2023
	£m	£m
Amortisation of deferred income	17.4	16.8
Income earned during the year	13.2	11.3
Contract fee income	30.6	28.1

 

 

 

 

Investment and other income

Investment income has improved to £5.9m as a result of the Group ensuring that Group investments benefited from the higher interest rates during the year, offset by lower foreign exchange profits on revaluation of net operating assets.

 

	2024	2023
	£m	£m
Bank interest and other income receivable	5.5	4.5
Foreign exchange profits on revaluation of net operating assets	0.4	0.9
	5.9	5.4

 

 

 

Origination costs

Under IFRS, new business commissions paid, together with the directly attributable incremental costs incurred on the issue of a contract, are deferred and amortised over the anticipated life of that contract to match the longer-term income streams expected to accrue from the contracts issued this year. Typical terms range between 6 years and 16 years, depending on the nature of the product. Other elements of the Group's new business costs, for example, salaries of sales staff, are expensed as incurred.

Origination costs incurred in 2024 have decreased by £1.2m to £10.3m from the prior year. Origination costs were lower in line with lower new business levels but offset by increased amortisation of prior year balances.

	2024	2023
	£m	£m
Origination costs - deferred to match future income streams	8.2	8.8
Origination costs - expensed as incurred	2.1	2.7
Investment in new business in year	10.3	11.5
Amortisation of deferred origination costs net of new deferrals	5.8	4.7
	16.1	16.2

 

 

 

 

Amounts totaling £13.9m (2023: £13.5m) have been expensed to match contract fee income earned this year from contracts issued in previous financial years, as can be seen in the analysis below.

 

Summarised origination costs for the year were:

	2024	2023
	£m	£m
Amortisation of deferred origination costs	13.9	13.5
Other origination costs incurred during the year	2.2	2.7
	16.1	16.2

Administrative and other expenses

We continue to manage our expense base robustly to control administrative expenses while supporting our strategic developments and other new business growth activities with targeted expenditure.

An analysis of administrative and other expenses is set out in notes 8 and 9 to the consolidated financial statements under IFRS. The following summarises some of the expenses attributable to the Group's own activities, excluding the third-party fund management fees collected and paid onwards by the Group to third parties having a relationship with the underlying contract of £5.1m (2023: £5.2m).

 

	2024	2023
	£m	£m
Salaries and other employment costs	11.3	10.6
Other administrative expenses	7.8	7.7
Professional fees, including audit	3.2	3.1
Recurring administrative and other expenses	22.3	21.5
Growth investment spend	2.7	0.8
Administrative and other expenses, excl. litigation and non-recurring expense items	25.0	22.3
Litigation defence and settlement costs	2.5	1.4
Provision for doubtful debts	0.7	0.1
Total administrative and other expenses	28.2	23.8

 

Salaries and other employment costs have increased by £0.7m or 6.6% to £11.3m. Although average Group headcount decreased to 182 people (2023: 187 people), following the implementation of our new policy administration system we have continued to develop the platform to position our business for future growth, leading to some previously deferred salary costs being recognised as expenses as incurred, accounting for £0.6m of the increase. We also temporarily strengthened our Client Services team following migration.

Other administrative expenses saw an increase of £0.1m to £7.8m as a result of the amortisation of the new policy administration system commencing with effect from 1 March (£0.5m), offset by efficiency savings in underlying administrative expenses despite persistent inflationary pressure.

Professional fees including audit increased by £0.1m to £3.2m against the prior year. These costs include amounts totalling £0.9m paid to the Group's auditor (2023: £0.8m), £0.6m (2023: £0.5m) for administration, custody, dealing, and other charges paid under the terms of the investment processing outsourcing arrangements; recruitment costs of £0.2m (2023: £0.2m), and costs of investor relations activities of £0.2m (2023: £0.2m).

Growth investment spend increased to £2.7m and represents internal and external costs to generate strategic opportunities for further growth as we look to leverage the capability of our new policy administration system. Following the implementation of the system, smaller incremental developments are no longer deferred and are recognised as expenses as incurred. The amount also includes expenditure associated with developing and delivery of our Japanese proposition and other new products.  

Litigation defence and settlement costs represent those costs (net of insurance recoveries) incurred in defending Hansard Europe against writs taken against it, as described more fully in note 26 to the consolidated financial statements.  Legal costs recovered from insurers were £0.7m (2023: £0.1m). A litigation provision of £0.4m has been recognised in the year, with the total balance of the provision as at 30 June 2024 being £0.5m (2023: £0.1m).

Provision for doubtful debts relate to the provision in full of fees and other balances likely to be irrecoverable from a set of primarily Hansard Europe legacy funds which are in the process of liquidation.

Future Prospects

During 2025 the Group's strategic priority will be to build on the significant projects delivered in 2024. The launch of the new portfolio bond in January and new Japanese proposition announced in June, along with other products currently in development, present significant new opportunities for sales. The second half of financial year 2024 showed increased PVNBP compared to the first half of the year for the first time since 2021, and we expect this trend to continue as our new propositions gain momentum. It takes a significant period of time for sales to generate a material change in IFRS profits given the long-term nature of our business. Profits are recognised over the life of the contracts, so new sales contribute positively to profitability over a number of years.

The implementation of the new policy administration system was a significant milestone for Hansard and has given the Group the platform required for expansion in the coming years and will facilitate a simpler approach to product development in future. Following implementation of the system, we have commenced the depreciation charges in the income statement. 2025 will be the first financial year where we will see a full year's depreciation charge, which will amount to a cost of £1.6m. Although this will reduce the published IFRS profit, the system development is no longer a cash cost to the company, the investment already having been made. We expect to be able to take actions over the course of financial year 2025 to deliver cost savings as a result of efficiencies arising from the new system, with the impact on IFRS profit being realised mainly from financial year 2026 onwards.

The business continues to make targeted investments in new product offerings, to build on the product developments already delivered, and to ensure the Group is well positioned for the future. In financial year 2025, the Company expects to incur modest development costs, which are expected to be expensed as incurred.

In recent years the Group has benefited from higher interest rates, leading to increased return on shareholder investments; however, declining interest rates in future may reduce these returns going forward.

Considering the above factors, we expect a short-term decline in the profitability of the Group measured using IFRS in financial year 2025; however, the Group's regulatory solvency cover, a key measure used to assess dividend-paying capability, is calculated primarily on the basis of non-IFRS measures and is expected to remain strong.

 

Cash Flow ANALYSIS

The operational cash surplus (fees deducted from contracts and commissions received, less operational expenses paid) for the year was £10.9m (2023: £15.9m) as a result of increased operational expenditure to position the business for future growth.

 

Writing new business, particularly regular premium business, produces a short-term cash strain as a result of the commission and other costs incurred at the inception of a contract.  Annual management charges offset this strain and produce a positive return over time.

 

Future increases in new business levels can be funded where necessary by the Group's significant cash resources, but over time as the level of contract holder assets is built up, the annual management charges that are earned from the Group's newer products will become sufficient to sustain new business growth and dividends.

 

During 2024, the Group invested £3.9m (2023: £6.6m) as part of a project to replace its policy administration system. These costs were capitalised as Intangible Assets on the Group's consolidated balance sheet as set out in note 13. 

 

Net cash inflows before dividends were £3.0m (2023: outflows of £1.6m), benefitting largely from £2.7m lower outflows during the year as we completed the replacement of our policy administration system. The prior year also includes an outflow of £5m into a bond portfolio.

 

Overall Group cash and deposits have decreased from £65.4m to £65.0m as at 30 June 2024, primarily driven by lower new business as noted above.

 

The following non-GAAP tables summarise the Group's own cash flows in the year:

 

	2024	2023
	£m	£m
Net cash surplus from operating activities	10.9	15.9
Interest received	4.2	3.0
Net cash inflow from operations	15.1	18.9
Net cash investment in new business	(8.1)	(8.5)
Purchase of property and computer equipment	(3.9)	(6.6)
Net cash investment in bond portfolio	-	(5.0)
Corporation tax paid	(0.1)	(0.4)
Net cash inflow / (outflow) before dividends	3.0	(1.6)
Dividends paid	(6.1)	(5.9)
Net cash outflow after dividends	(3.1)	(7.5)

 

	2024	2023
	£m	£m
Net cash outflow after dividends	(3.1)		(7.5)
Increase / (decrease) in amounts due to contract holders	2.7		(0.6)
Net Group cash movements	(0.4)		(8.1)
Group cash and deposits - opening position	65.4		74.5
Effect of exchange rate movements	-		(1.0)
Group cash and deposits - closing position	65.0		65.4

 

The below table reconciles the key lines for this year in the above non-GAAP cash flow to the key lines in the consolidated cash flow shown on page 97.

	Non-GAAP Cash Flow	Consolidated Cash Flow Statement
	£m	£m
Net cash flow from operations before tax	15.1	6.2
Adjust for net movement in policyholder financial assets and liabilities	-	4.8
	15.1	11.0
Purchase of property and computer equipment (tangible and intangible)	(3.9)	(3.9)
Corporation tax paid	(0.1)	(0.1)
Dividends paid	(6.1)	(6.1)
Net cash investment in business	(8.1)	-
Increase in amounts due to contract holders	2.7	-
Net movement in assets and liabilities relating to contract holders	-	(1.3)
	(5.4)	(1.3)
Net Group cash movements	(0.4)	(0.4)

 

 

 

Group bank deposits and money market funds

The Group holds its liquid assets in highly rated money market liquidity funds and with a wide range of deposit institutions to diversify counterparty risk. Deposits totalling £17.1m (2023: £13.2m) have original maturity dates typically greater than 3 months and are therefore excluded from the definition of "cash and cash equivalents" under IFRS and are instead included within 'Deposits and money market funds' in the consolidated balance sheet. The following table summarises the total cash and deposits at the balance sheet date.

	2024	2023
	£m	£m
Money market funds and immediately available cash	47.3	41.2
Short-term deposits with credit institutions	0.6	11.0
Cash and cash equivalents under IFRS	47.9	52.2
Deposits and money market funds	17.1	13.2
Group cash and deposits	65.0	65.4

 

 

 

Abridged consolidated balance sheet

The consolidated balance sheet on page 96 presented under IFRS reflects the financial position of the Group at 30 June 2024. As a result of its method of presentation, the consolidated balance sheet incorporates the financial assets held to back the Group's liability to contract holders and incorporates the net liability to those contract holders of £1,150.9m (2023: £1,101.5m). Additionally, that portion of the Group's capital that is held in bank deposits is disclosed in "cash and cash equivalents" based on original maturity terms, as noted above.

The abridged consolidated balance sheet presented below, adjusted for those differences in disclosure, allows a better understanding of the Group's own capital position.

	2024	2023
	£m	£m
Assets
Deferred origination costs	112.1	117.8
Other assets	38.7	27.6
Bank deposits and money market funds	65.0	65.4
	215.8	210.8
Liabilities
Deferred income	140.2	144.8
Other payables	54.7	44.2
	195.0	189.0
Net assets	20.8	21.8
Shareholders' equity
Share capital and reserves	20.8	21.8

 

Other assets include intangible assets, property, plant and equipment and other receivables. Other payables include amounts due to investment contract holders and other payables.

Deferred origination costs

The deferral of origination costs reflects that the Group will earn fees over the long-term from contracts issued in a given financial year. These costs are recoverable out of future net income from the relevant contract and are charged to the consolidated statement of comprehensive income on a straight-line basis over the life of each contract.

The movement in value over the financial year is summarised below.

	2024	2023
Carrying value	£m	£m
At beginning of financial year	117.8	122.5
Origination costs deferred during the year	8.2	8.7
Origination costs amortised during the year	(13.9)	(13.4)
	112.1	117.8

 

 

 

Deferred income

The treatment of deferred income ensures that contract fees are taken to the consolidated statement of comprehensive income in equal instalments over the longer-term, reflecting the services to be provided over the period of the contract. This is consistent with the treatment of deferred origination costs. Deferred income at the balance sheet date is the unamortised balance of accumulated initial amounts received on new business.

The proportion of income deferred in any one year is dependent upon the mix and volume of new business flows in previous years. The Group's focus on regular premium business means that these fees are received over the initial period of the contract, rather than being received up front, as is often the case with single premium contracts.

The majority of initial fees collected during the year relates to charges taken from contracts issued in prior financial years demonstrating the cash generative nature of the business. Regular premium contracts issued in this financial year will generate the majority of their initial fees over the next 18 months on average.

The movement in value of deferred income over the financial year is summarised below.

	2024	2023
Carrying value	£m	£m
At beginning of financial year	144.8	145.1
Initial fees collected in the year and deferred	12.7	16.5
Income amortised during the year to fees income	(17.4)	(16.8)
	140.1	144.8

CONTRACT HOLDER Assets under administration

In the following paragraphs, contract holder assets under administration ("AuA") refers to net assets held to cover financial liabilities, as analysed in note 17 to the consolidated financial statements presented under IFRS.  Such assets are selected by or on behalf of contract holders to meet their investment needs.

The Group receives investment inflows to its AuA from single and regular premium contracts which are offset by withdrawals, charges, premium holidays affecting regular premium policies, and by market valuation movements.

The majority of premium contributions are designated in currencies other than sterling, reflecting the wide geographical spread of those contact holders.  The currency composition of AuA at the balance sheet date is similar to the prior year, with 73% of AuA designated in US dollar (2023: 71%) and 7% in euro (2023: 8%).

Certain collective investment schemes linked to customers' contracts can from time to time become illiquid, suspended or be put into liquidation. In such cases, the Directors are required to exercise their judgement in relation to the fair value of these assets.  The cumulative impact on the balance sheet is not material.

The value of AuA at 30 June 2024 was £1,150.9m, 4.5% higher than 30 June 2023.  Lower regular premiums and increased withdrawals were offset by higher single premiums, and market and currency movements as global stock markets rallied in the second half of the year. 

The following table summarises the movements in the year: 

	2024	2023
	£m	£m
Deposits to investment contracts - regular premiums	74.4	86.1
Deposits to investment contracts - single premiums	33.9	30.2
Withdrawals from contracts and charges	(173.3)	(147.7)
Effect of market and currency movements	114.4	40.6
Movement in year	49.4	9.2
Opening balance	1,101.5	1,092.3
Closing balance	1,150.9	1,101.5

 

The analysis of AuA held by each Group subsidiary to cover financial liabilities is as follows:

	2024	2023
Fair value of AuA at 30 June	£m	£m
Hansard International	1,091.6	1,037.7
Hansard Europe	59.3	63.8
	1,150.9	1,101.5

 

 

 

 

 

 

Assets to cover the financial liabilities of Hansard Worldwide are held by Hansard International and therefore are included within Hansard International's total AuA.

Since it closed to new business in 2013, Hansard Europe's AuA has been declining broadly in line with expectations as contracts are surrendered or mature.

DIVIDENDS

An interim dividend of 1.8p per share was paid in April 2024. This amounted to £2.5m.

The Board has resolved to recommend a final dividend of 2.65p per share (2023: 2.65p) for shareholder approval at the AGM.  Subject to approval at the AGM, this dividend will be paid on 14 November 2024 and will bring the total dividends in respect of the year ended 30 June 2024 to 4.45p per share (2023: 4.45p per share).

complaints and potential litigation

Financial services institutions can be drawn into disputes in cases where the performance of assets selected directly by or on behalf of contract holders through their advisors fails to meet their expectations. This is particularly relevant in the case of more complex products distributed throughout Europe prior to 2014.

Even though the Group have never given any investment advice, as this is left to the contract holder directly or through an agent, advisor or an entity appointed at their request or preference, the Group has been subject to a number of complaints in relation to the performance of assets linked to contracts. Most of the cases have arisen in Italy, with a smaller number in Belgium and Germany.

As at 30 June 2024, the Group had been served with writs with a net cumulative exposure totalling €23.8m, or £20.2m in sterling terms (30 June 2023: €26.1m / £22.4m) arising from contract holder complaints and other asset performance-related issues. These are disclosed as contingent liabilities in note 26 to the consolidated financial statements. The decrease in contingent liabilities is primarily due to a case with a potential exposure of approximately £1.4m now being considered to be remote and thus outside the scope of a contingent liability; there has also been a reduction in the number of German cases.

During the year, the Group successfully defended eight cases with net exposures of approximately £1.3m, five of which may be appealed by the plaintiffs (2023: successfully defended fifteen cases with net exposures of £1.9m). These successes continue to affirm confidence in the Group's legal arguments.

Our policy is to maintain contingent liabilities even where we win cases in the court of first instance if such cases have been subsequently appealed.  This includes our largest single case in Belgium.

We have previously noted that we expect a number of our claims to ultimately be covered by our Group insurance cover.  During the year we recorded £0.7m in insurance recoveries in relation to litigation expenses (2023: £0.1m).  We expect such reimbursement to continue during the course of those claims. 

While it is not possible to forecast or determine the final result of such litigation, based on the pleadings and advice received from the Group's legal representatives and experience with cases previously successfully defended, we believe we have a strong chance of success in defending these claims. Other than smaller cases where, based on past experience, it is expected a settlement might be reached, the writs have therefore been treated as contingent liabilities and are disclosed in note 26 to the consolidated financial statements.  Where there is an established pattern of settlement for a grouping of claims, a provision has been made for the remaining exposures and included in note 20 'Provisions', to the extent that they can be reliably estimated.

Net asset value per shaRE

The net asset value per share on an IFRS basis as at 30 June 2024 is 15.1p (2023: 15.9p) based on the net assets in the Consolidated Balance Sheet divided by the number of shares in issue, being 137,557,079 ordinary shares (2023: 137,557,079).

 

Risk management and internal control

The Group continues to operate a comprehensive Enterprise Risk Management Framework, reflective of the Board's focus on effective risk management as an integral element of corporate success. The ERM Framework sets out the governance arrangements, principles, guidelines, practices and standards for risk management and internal control, which cumulatively ensure that the business is robustly prepared to identify, understand, and navigate the uncertainties and risks which it may encounter, and which can either pose threats or offer opportunities. The ERM Framework ensures that all such threats and opportunities, whether actual or emerging, are identified, assessed, monitored, managed, and reported using structured, consistent, and comprehensive methodologies, which seek to embed risk management within strategic decision-making and business planning activities and continuously shape organisational values and culture. The maturity of the ERM Framework and its capacity to respond quickly to emerging risks and adapt to changes arising via the internal or external environment, ensure that risk management and internal control remain central to the Board's oversight, direction and control of the Group, compelling informed decision making and sound business practices.

Approach

Having regard to the Financial Reporting Council's 'Guidance on Risk Management, Internal Control and Related Financial and Business Reporting', the ERM Framework encompasses the policies, processes, tasks, cultural attributes, behaviours, reporting conventions, and other aspects of the Group's environment, which cumulatively:

·      Support the Board's determination of the nature and extent of the Group's principal risks and the boundaries of risk appetite governing the pursuit and achievement of strategic objectives.

·      Inform the Board's understanding and assessment of existing, evolving, and emerging risks, together with combinations of those risks in the form of plausible stresses and scenarios, which have the potential to threaten the Company's business model, future performance, solvency, liquidity, operational resilience, regulatory standing, or reputation. This includes analysis of the likelihood, impact, and time horizon over which such risks, or combinations of risks, might emerge or crystallise and determining how such risks should be managed or mitigated to reduce their likelihood or impact.

·      Facilitate the effective and efficient operation of the Group and its subsidiary entities by enabling a consolidated and comprehensive approach to the management of risks across the Group, with specific attention to aggregate impacts and effects, enabling appropriate responses to significant business, operational, financial, compliance and other risks to business objectives, so safeguarding the assets of the Group.

·      Help to ensure the quality of internal and external reporting. This requires the maintenance of proper records and processes that generate a flow of timely, relevant, and reliable information from within and outside the Group, enabling the Board to form their own view on the effectiveness of risk management and internal control arrangements through the regular provision of relevant information and assurances.

·      Seek to ensure continuous compliance with applicable laws and regulations as well as with internal policies governing the conduct of business.

·      Drive the cultural tone and expectations of the Board in respect of governance, risk management and internal control arrangements and the delegation of associated authorities and accountabilities.

The ERM Framework has been designed to be appropriate to the nature, scale, and complexity of the Group's business at both corporate and subsidiary level. The ERM Framework components are reviewed on at least an annual basis and refined, if necessary, to ensure they remain fit for purpose in substance and form and continue to support the Directors' assessment of the adequacy and effectiveness of the Group's risk management and internal control systems. Such assessment depends upon the Board maintaining a thorough understanding of the Group's risk profile, including the types, characteristics, interdependencies, sources, and potential impact of both existing and emerging risks on an individual and aggregate basis.

Risk governance arrangements

The Board retains ultimate responsibility for the ERM Framework and its effective operation, and the Directors are responsible for determining, evaluating, and controlling the nature and extent of the risks which the Board is willing to accept across the spectrum of risk disciplines. The Board has formally delegated certain responsibilities in respect of internal controls and risk management to the Audit and Risk Committee. These responsibilities are defined within the Committee's terms of reference and provide for a range of important oversight and scrutiny protocols including:

·    Continuous review of the Group's internal financial controls (being the systems established to identify, assess, manage, and monitor financial risks) and other internal control and risk management systems relating to financial reporting.

·    Robust assessment of the emerging and principal risks facing the Group, identified, and reported via established ERM Framework components, and the provision of comfort to the Board that risks are being managed and controlled within the Board's overall risk appetite.

·      Independent evaluation of the ERM Framework to confirm that it remains adequate, effective, and proportionate to the nature, scale and complexity of the risks inherent in the business.

During the year ended 30 June 2024 the Group Risk Forum ("GRF") has continued to champion the embedding of risk ownership, ensuring responsibilities and accountabilities for risk management and risk-based decision making are transparent and proactively owned at all business levels. The value of effective, dynamic interfaces between the governance, risk management and internal control conventions of the ERM Framework and those constituting the Group and subsidiary Own Risk and Solvency Assessment ("ORSA") cycles remains a core focus for the GRF.

 

The Group ORSA report reflects the cycle of ongoing activities and arrangements which enable the Board and the Executive Committee to properly assess and understand at a practical level the short and long-term risks facing the Group and the capital required to cover those risks, under both normal and stressed conditions. The ORSA considers the major sources of risk that the Group, or a subsidiary entity, may face under the principal and subordinate risk designations of the ERM Framework. Both internal and external risks are considered, together with emerging risks and any risks associated with the Group's systems of governance. The ORSA includes capital, performance and strategic information and provides management with key information for decision making.

 

The disciplines of the ERM Framework seek to coordinate risk management in respect of the Group as a whole, including for the purpose of ensuring compliance with capital adequacy requirements, liquidity adequacy requirements and regulatory capital requirements, in line with the Isle of Man Financial Services Authority Risk-Based Capital Regime.

Governance, risk management and internal control protocols remain structured upon a 'three lines' model, which determines how specific duties and responsibilities are assigned and coordinated. First line management are responsible for identifying risks, executing effective controls, and escalating risk issues and events to the Group's Control Functions. The Group Risk and Compliance Functions (Second line) oversee and work in collaboration with the First Line, ensuring that the business is conducted in a manner consistent with rules, limits, and risk appetite constraints. The Group Internal Audit Department (Third line) provides independent assurance services to the Board and the Executive Committee on the adequacy and effectiveness of the Group's governance, risk management and internal control arrangements.

The ERM Framework seeks to add value through embedding risk management and effective internal control systems as continuous and developing processes within strategy setting, programme level functions and day-to-day operating activities. The ERM Framework also acknowledges the significance of organisational culture and values in relation to risk management and their impact on the overall effectiveness of the internal control framework.

Emerging Risks

The ERM Framework promotes the pursuit of its overarching performance, information, and compliance objectives through focus on five interrelated elements, which enable the management of risk at strategic, programme and operational level to be integrated, so that layers of activity support each other. The five interrelated elements are defined as:

·      Management oversight and the control culture.

·      Risk recognition and assessment.

·      Control activities and segregation of duties.

·      Information and communication.

·      Monitoring activities and correcting deficiencies.

In addition to existing risks the ERM conventions, which support delivery of the elements listed above, target emerging and evolving risks using both top-down and bottom-up bases. The top-down aspect involves the Board regularly analysing and evaluating the nature and extent of the risks to which the Group is or may be exposed, even where these may be difficult to assess and quantify. The bottom-up approach involves the identification, review and continuous monitoring of risk issues and emerging risks at functional and divisional levels, with analysis and formal reporting to the Group Risk Forum on a quarterly basis. This allows actions to be developed or adapted on a timely basis and enables onward analytical reporting to the Board. These arrangements ensure that the Board remains aware of potential changes in risk profile on a forward-looking basis and sensitive to the materiality of potential impacts.    

Stress and scenario testing is used to explore, assess, and quantify emerging risks as well as to analyse and assess any changes in existing aspects of the 'Risk Universe', which are monitored via the ERM Framework. Such assessment and analyses use both quantitative tests and qualitative assessments to consider reasonably plausible risk events, including those stresses and scenarios that could lead to failure of the business, approximated to the range of impact types which can be envisaged. The results of the stress and scenario testing are considered and explored by the Group Risk Forum, the Audit and Risk Committee and the Board, as necessary and appropriate.  

The system of internal control is designed to understand, mitigate, and manage, rather than eliminate risk of failure to achieve business objectives, and seeks to provide reasonable, rather than absolute, assurance against material misstatement or loss.

Review of Risk Management and Internal Control Systems

The results of the risk management processes combine to facilitate identification of the principal business, financial, operational and compliance risks and any associated key risks at a subordinate level. Established reporting cycles enable the Board to maintain oversight of the quality and value of risk management and internal control activities throughout the year and ensure that the entirety of the governance, risk management and internal control frameworks, which constitute the ERM Framework, are operating effectively and as intended. These processes have been in place throughout the year under review and up to the date of this report.

Independently of its quarterly and ad hoc risk reporting arrangements the Board has conducted its annual review of the effectiveness of the Company's risk management and internal control systems including financial, operational and compliance controls. This review is undertaken in collaboration with the Audit and Risk Committee and is based upon analysis and evaluation of:

 

·      Attestation reporting from the key subsidiary companies of the Group as to the effective functioning of the risk management and internal control frameworks and the ongoing identification and evaluation of risk within each subsidiary.

 

·      Formal declarations from Executive Managers, via quarterly risk and control self-assessments, that risks   falling under their respective span of control are being managed and assessed appropriately and key controls are working effectively and as intended. Reporting must include progress updates on the timely and effective delivery of Management Actions to address any identified control weaknesses, in accordance with the commitments recorded in the Group Risk Management Platform. The cumulative results of cyclical risk reporting by senior and executive management via the GRF, having regard to the 'five pillar' structure of the ERM Framework, which drives analytical reporting to the Audit and Risk Committee. Independent assurance work by the Group Internal Audit Department to identify any areas for enhancements to internal controls and work with management to define associated action plans to deliver them.

 

The Board has determined that there were no areas for enhancement which constituted a significant weakness for the year under review and the Directors are satisfied that the Group's governance, risk management and internal control systems are operating effectively and as intended.

Financial Reporting Process

Integral to ERM monitoring and reporting arrangements are the conventions which ensure that the Board maintains a continuous understanding of the financial impacts of the Group failing to meet its objectives, due to crystallisation of an actual or emerging risk, or via the stress and scenario events, which the Board considers to be reasonably plausible. This includes those stresses and scenarios that could lead to a failure of the business. Planning and sensitivity analyses incorporate Board approval of forecast financial and other information. The Board receives regular representations from Senior Executives in this regard.

Performance against targets is reported to the Board quarterly through a review of Group and subsidiary companies' results based on accounting policies that are applied consistently throughout the Group.  Financial and management information is prepared quarterly by the Chief Financial Officer ("CFO") and presented to the Board and the Audit and Risk Committee. The members of the Audit and Risk Committee review the interim financial statements for the half year ending 31 December and the full financial year and engage with the CFO to discuss and challenge the presentation and disclosures therein. Once the draft document is approved by the Audit and Risk Committee, it is reviewed by the Board before final approval by the Board.

Outsourcing

The majority of investment dealing and custody processes in relation to contract holder assets are outsourced under a formal contract to Capital International Limited (CIL, https://www.capital-iom.com/), a company authorised by the Isle of Man Financial Services Authority and a member of the London Stock Exchange. The contract is managed by a dedicated Relationship Manager against a documented Service Level Agreement, which includes Key Performance Indicators. CIL is required to confirm quarterly that no material control weaknesses have been identified in their operations; this is overseen via service delivery monitoring performed by the Relationship Manager.  Each year CIL are required to confirm and evidence the adequacy and effectiveness of their internal control framework through a formal Assurance Report on Internal Controls, with an external independent review performed in in 2023 and 2024.

Our core policy administration platform is provided as a Software As A Service solution by Majesco (www.majesco.com). This covers all policy and advisor administration as well as the provision of the Hansard Client and Advisor online portals which support self-service administration. Monthly service meetings are held with Majesco with a formal annual review undertaken.  Majesco also participates in scheduled security tests and simulations.  The Majesco system code is held in escrow with the NCC Group, which supports contingency planning in the event of a failure of a provider.

Manx Telecom (wwww.manxtelecom.com) provides our hosting services and core internet connectivity, which supports several core infrastructure elements such as our virtual desktops and servers.  Manx Telecom data centres operate to Tier 3 standard and are ISO 27001 accredited. Monthly service meetings are held with Manx Telecom with a formal annual review undertaken.  Manx Telecom is an active participant in scheduled security tests and simulations.

Risks Relating to the Group's Financial and Other Exposures

Hansard's business model involves the controlled acceptance and management of risk exposures. Under the terms of the unit-linked investment contracts issued by the Group, the contract holder bears the investment risk on the assets in the unit-linked funds, as the policy benefits are directly linked to the value of the assets in the funds. These assets are administered in a manner consistent with the expectations of the contract holders. The Group maintains a precise match between the investment assets held and the contract holder liabilities, and so the market risk and credit risk lie with contract holders.

 

The Group's exposure on this unit-linked business is limited to the extent that income arising from asset management charges and commissions is generally based on the value of assets in the funds, and any sustained falls in value will reduce earnings. In addition, there are certain financial risks (credit, market, and liquidity risks) in relation to the investment of shareholders' funds. The Group's exposure to financial risks is explained in note 3 to the consolidated financial statements.

                       

The Board believes that the principal risks facing the Group's earnings and financial position are those risks which are inherent to the Group's business model and operating environment. The regulatory landscape continues to evolve at both a local and international level and the risk management and internal control frameworks of the Group must remain responsive to developments which may change the nature, impact or likelihood of such risks, or the time horizon within which they might crystallise.

Principal Risks

 

The following table sets out the principal inherent risks that may impact the Group's strategic objectives, profitability, capital position or resilience and provides an overview of how such risks are managed or mitigated. The Board robustly reviews and considers its principal risks on at least a quarterly basis and for the year ended 30 June 2024 has continued to consider specifically the likelihood, impacts and timescales within which such risks might crystallise, together with assessment of contingent uncertainties and any emerging risks. No emerging risks have been identified during the reporting period, which require disclosure additional to the principal risks described below.

 

Risk	Risk Factors and Management
Distribution Risk:   Arising from poor planning, execution or governance of distribution strategy, or the emergence of events or conditions which obstruct the achievement of business plan targets, including market changes, technological advancement, loss of key intermediary relationships or competitor activity.	The business environment in which the international insurance industry operates is subject to continuous change and development as new market and competitor forces come into effect, regulatory landscapes evolve, and technological advancements are realised. Any failure by the Group to ensure that distribution strategy is well planned, governed and executed can be expected to undermine competitive advantage in commercially significant jurisdictions, or market segments, or the Group's efforts to build and sustain successful distribution relationships. How we manage the risk: ·      Robust governance, risk management and internal control practices underpin the development and formalisation of distribution strategy. Strategy revisions are designed to add additional scale to the business, on a more diversified basis, through organic growth at acceptable levels of risk and profitability. ·      Key Risk Indicators provide for continuous monitoring of marketplaces, competitor activity and consumer sentiment by the Group Risk Forum and the early identification of emerging risks or threats. Reporting protocols enable the rapid escalation of any adverse trends to the Audit and Risk Committee. ·      Stress and scenario modelling considers the consequences of production falling materially above or below forecast new business levels. This allows the Board to ensure that forecasting and planning activities are sufficiently robust and well targeted. ·      Continuous investment in and development of technology. During the reporting period we have continued to maintain close contact with our distribution partners as new technological solutions were deployed. ·      Investment in new markets and expansion of existing markets, developing new key distributor relationships and new product development for specific markets and globally.
Market Risk:   Arising from major market stresses or fluctuations in market variables, resulting in a fall in equity or other asset values, currency volatilities or a combined scenario manifesting.	Market risk remains an inherent element of the Group's unit linked business and is continuously assessed and monitored via the ERM Framework. This monitoring recognises the international nature of the Group's operations and the challenges which might emerge from a significant adverse currency movement over a sustained period. Key risk indicators also assess the potential for balance sheet and profit reduction impacts to emerge from a drop in equities, and the potential contagion effects for the broader risk portfolio. Such contagion might include deferred impacts to profit through reduced sales activity, concentration risks on fund holdings/underlying assets, and reduced incomes through increased lapse rates. Simultaneously the Board recognises that socioeconomic vulnerabilities and prevailing uncertainties associated with economic volatility might curb consumer appetite for the selection and purchase of financial services products and the period over which business is retained. In addition, the Group operates internationally and earns income in a range of different currencies, with the majority of premiums denominated in USD, whilst the vast majority of its operational cost base is denominated in GBP. A significant adverse currency movement over a sustained period remains a principal risk to the Group. How we manage the risk: ·      The Board recognises that market volatilities and currency movements are unpredictable and driven by a diverse range of factors and these risks are inherent in the provision of investment-linked products. KRIs are established to monitor evolving and emerging indicators of adverse experience to enable the triggering of management actions at the earliest opportunity. ·      The currencies of assets and liabilities are matched within set tolerances and certain expenses are invoiced in US Dollars to match against US Dollar income streams. ·      Business plans are modelled across a broad range of market and economic scenarios and take account of alternative commercial outlooks within overall business strategy. This promotes a greater understanding of market and currency risk, the limits of the Group's resilience and the range of possible mitigating options. ·      Stress testing performed during the year ended 30 June 2024 assessed the impacts of reasonably plausible market risk events and scenarios, including those resulting from macroeconomic challenges driven by geopolitical instabilities, inflationary outlooks, uncertainties in commodity price and currency volatilities. ·      The long-term nature of the Group's products serves to smooth short term currency fluctuations. However, longer term trends are monitored and considered in pricing models.
Credit Risk:   Arising from the failure or default of a counterparty such that the Group does not receive cash flows or assets to which it is entitled.	In dealing with third party financial institutions, including banking, money market and settlement, custody, reinsurers and other counterparties, the Group is exposed to the risk of financial loss and potential disruption of core business functional and operational processes. Financial loss can also arise when the funds in which contract holders are invested become illiquid, resulting in past and future fee income not being received.  The failure of Independent Financial Advisors ("IFAs") can also result in loss where unearned commissions can be due back to the Group. How we manage the risk: ·      The Group seeks to limit exposure to loss or detriment via counterparty failure through robust selection criteria, minimum rating agency limits, pre-defined risk-based limits on concentrations of exposures and continuous review of positions to identify, evaluate, restrict, and monitor various forms of exposure on an individual and aggregate basis. These include robust selection criteria in respect of intermediaries with whom we establish Terms of Business and ongoing monitoring in accordance with key risk indicators and appetite tolerance limits. ·      During the reporting period we have continued to closely monitor geopolitical developments and potential disruptions to international payment systems and capital markets arising from the extensive sanctions in force in the context of the Russia-Ukraine conflict.
Liquidity and Cashflow Risk:   Arising from a failure to maintain adequate levels of liquidity and cashflow to meet financial obligations under both planned and stressed conditions.	If the Group does not have sufficient levels of liquid assets and cashflow to support business activities or settle its obligations as they fall due, the Group may be in default of its obligations and may incur significant sanction, loss, or cost to rectify the position. How we manage the risk: ·      Shareholder and policyholder cash assets are invested in a prudent manner, in accordance with set criteria, designed to mitigate liquidity and cashflow risk, including high quality Money Market Funds, Fixed Deposits and Corporate Bonds. ·      The Treasury Working Group, which reports to the Investment Committee, oversees the day-to-day investment of balances. The Investment Committee and Audit and Risk Committee are responsible for setting the criteria used.
Legal and Regulatory Risk:   Arising from changes in the regulatory landscape, which adversely impact the Group's business model, or from a failure by the Group, or one of its subsidiary entities, to meet its legal, regulatory or contractual obligations, resulting in the risk of loss or the imposition of penalties, damages or fines	The scale and pace of change in regulatory and supervisory environments and expectations continue to require efficient and effective ways to evidence and demonstrate how legal and regulatory obligations are met, whilst compliance analytics and high-quality data driven insights are becoming increasingly important. The direction of regulatory travel demands continued investment in the capacity, competence, and capability of resourcing across all business areas, having regard to the extent of risk interdependencies and the embedding of personal accountability regimes. The impacts associated with crystallisation of a significant legal or compliance failing, including sanctions or judgments against Hansard entities, financial penalties, public disclosures, reputational damage, restrictions on activities and other forms of intervention, have been escalated by sea-changes in political landscapes and shifting supervisory attitudes to regulatory effectiveness. The interpretation or application of regulation over time may impact market accessibility, broker relationships and / or competitive viability. If the Group fails to monitor the legal and regulatory environment or adequately integrate the management of associated obligations within strategic, business model or business planning processes there may be material risk to the achievement of strategic objectives both in the short and longer term.   How we manage the risk: ·      Robust strategic planning processes informed by analytical review of the external environment and consideration of associated risk in the short and longer term. ·      Continuous monitoring and review of developments in international law and regulation and proactive management of how such developments might shape jurisdictional specific reaction. ·      Active and transparent engagement with regulatory authorities and industry bodies on a multi-jurisdictional basis, including active engagement in and responding to regulatory consultation exercises. ·      Maintenance of robust governance, risk management and internal control arrangements to ensure that legal and regulatory obligations are substantively met on a continuing basis. ·      Active engagement with professional advisors to address specific risks and issues that arise.
Financial Crime Risk:     Arising from any failure to evidence and demonstrate the establishment, implementation and maintenance of effective governance, risk management and internal control arrangements for the prevention and detection of illicit economic activity, including money laundering, terrorist financing, proliferation financing, sanctions evasion, bribery, corruption, and fraud, or to ensure the arrangements are operating effectively and as intended on a continuing basis.	The Board recognises that financial crime takes on many forms, allowing criminal actors and organised crime gangs alike to infiltrate economic and financial systems, with additional challenges presented by geoeconomic uncertainties and geopolitical instabilities. The breadth of financial crime affirms the ubiquity of this risk with inherent links to violent crime and the ability to significantly undermine jurisdictional social and economic structures. The rapid innovation of digital technologies is increasingly enabling financial crimes to be carried out remotely, presenting additional complexities to prevention and detection and highlighting its transnational impacts. Within this context regulators are taking, and expecting from firms, an increasingly holistic approach to mitigating financial crime risks with robust and effective systems and controls established to detect and prevent all forms of illicit economic activity. It is imperative that these arrangements are fit for purpose in terms of both design and implementation and are capable of adapting to emerging and evolving financial crime risks.   How we manage the risk: ·      Rigorous governance, risk management and internal control arrangements to prevent and detect illicit economic activity with the capability to identify and respond to any emerging risks or threats. ·      Rapid, scalable, and effective sanctions screening mechanisms to ensure robust, effective, and compliant understanding of the landscape on a continuing basis. ·      Implementation of scrutiny and oversight controls across all three lines of defence to ensure governance layers proactively target both the design and effective operation of the risk management and internal control frameworks. ·      Highly experienced technical resource dedicated to respective compliance deliveries.
Culture and Conduct Risk: Arising from any failure of governance, risk management and internal control arrangements, via corporate or individual actions.	Organisational culture remains under scrutiny by the Board as a fundamental driver of corporate success, prudential soundness, and compliant conduct. Any failure to adequately assess, monitor, manage and mitigate risks to the delivery of fair customer outcomes, or to market integrity, can be expected to result in material detriment to the achievement of strategic objectives and incur regulatory censure, financial penalty, contract holder litigation and / or material reputational damage. Clear and heightened regulatory expectations of individual and corporate accountability continue to connect governance, risk, and compliance obligations directly to cultural imperatives and the responsibilities assigned to individual Senior Managers.  How we manage the risk: ·      Programme level initiatives to address and support cultural change and development have remained in active progress during the reporting period with the results of investment in culture diagnostics informing business decision-making and tactical solutions to drive cultural change, where needed. ·      Iterative enhancements to the Group's ERM Framework continue to drive and deliver the integration of conduct risk management at both a cultural and practical level. ·      Business activities designed to manage the volume and velocity of regulatory change include a core focus on ensuring compliance with conduct risk obligations, managing conflicts of interest, preventing market abuse, and building robust governance arrangements around new product development and product suitability processes. ·      Forward looking risk indicators and executive leadership in respect of understanding and addressing the drivers of conduct risk focus on all core areas with assessment at strategic, functional, and operational levels. ·      The Group maintains regular dialogue with its regulatory authorities and with its external advisors in relation to developments in the regulatory environments in which we operate.
Operational Resilience Risk: Arising from any exposure to risk events with the capacity to cause operational failures or wide scale disruptions in financial markets, whether directly or via a third party.	The ability to maintain critical services or operations during periods of disruption is receiving increasing levels of regulatory scrutiny with concurrent growth in the formalisation of regulatory expectation. 'Resilience Principles' build on the real-world tests presented by the Covid-19 pandemic and the near-term threat of disruption of key global infrastructure in the context of the ongoing Russia-Ukraine conflict. Resilience risk and associated regulatory expectations directly extend to threats originating via third parties, including external providers, supply chains networks and outsourcing architectures intended to leverage economies of scale, gain access to specialist expertise, or deliver advanced technologies supporting innovative services. Global supervisory attention is focussed on regulating for resilience by ensuring that strategies such as grounding resilience analyses in key delivery requirements, appreciating the potential for systemic vulnerabilities and embracing a diversity of approaches combine to strengthen the ability of financial services firms to withstand operational risk related events. How we manage the risk: ·      ERM conventions guide the identification and assessment of events or scenarios presenting risk to operational resilience - typically pandemics, cyber incidents, technology failures or natural disasters - as well as supply chain disruption impacts to critical processes, business continuity and good governance. ·      Impact tolerances, together with mapping and testing allow the identification of services which could cause harm, if disrupted and identify any areas of vulnerability. ·      Stress testing, continuity planning, and recovery and resolution strategies provide for continuous review of the adequacy and effectiveness with which the business can respond to and recover from disruptions.
Cyber and Information Security Risk: Arising from the increased digitalisation of business activities and growing dependence upon technology in the context of exposure to elevated and more pernicious forms of digital and cyber risk.	The nature and complexity of cyber threats and cyber risk present the single most significant risk to financial services firms. The mounting sophistication and persistence of cybercrime and the growing adoption of highly advanced, nation-state type tools by cyber criminals, underscore the challenges in understanding and anticipating the nature of cyber threats and cyber risks. Over the longer-term, technological advances, including advances in generative AI, can be expected to enable a wide range of state and non-state agents to access information which will allow new tools of disruption to be conceptualised and developed. Organised crime continues to exploit weaknesses in cyber defences whilst new technological capabilities and use of third-party platforms add to the complexity of understanding the complete reach of cyber and information security exposures. Geopolitical tensions and the rapid escalation of conflict combined with technological advances in generative AI and the leveraging of misinformation and disinformation will continue to provoke unprecedented cyber risks for Western governments and corporations. Building resilience to continuously evolving cyber risk remains a priority for all stakeholders focussed on three core areas - cyber risk identification, cyber risk governance and cyber risk resilience In the event of any material failure in core business systems, or business processes, or if the Group fails to take adequate and appropriate measures to protect its systems and data from the inherent risk of attack, disruption and/or unauthorised access by internal or external parties, this could result in confidential data being exposed and/or systems interruption. A significant cybercrime event could result in reputational damage, regulatory censure, and financial loss. How we manage the risk: ·      Continuous focus on the maintenance of a robust, secure, and resilient IT environment that protects customer and corporate data as a core element of our operational resilience mapping. ·      Control techniques deployed to evaluate the security of systems and proactively address emerging threats both internally within the organisation and externally, through regular engagement with internet and technology providers and through industry forums. ·      Maintenance of detailed and robust Business Continuity and Disaster Recovery Plans, including full data replication at an independent recovery centre, which can be invoked when required. ·      Frequent and robust testing of business continuity and disaster recovery arrangements. ·      Periodic independent third-party systems penetration testing and review of controls. ·      Horizon scanning to identify and assess supervisory initiatives advocating and promoting good practice in cyber resilience and associated industry developments.
Corporate Sustainability Risk: Arising from the risk of failing to integrate environmental, social and governance considerations into the Group's strategic and business planning activities, or to proactively review, understand and act on the challenges and opportunities presented.	The importance of integration of sustainability issues into the Group's core strategies and business plans is recognised by the Board, requiring value-driven, adaptive practices. These practices must continuously enhance the Group's corporate governance arrangements, as sustainability related issues evolve, and demonstrate to clients, investors, regulators, and wider stakeholder groups that sustainability and resilience risks and opportunities are understood. How we manage the risk: ·      Actively building sustainability considerations into strategy development and business planning processes through structured analysis, formal assessment mechanisms and cross-functional collaboration. ·      Factoring emerging sustainability risk issues into key decision-making and understanding the impacts for the tools and methodologies currently used to manage risk, including governance structures, risk ownership, risk and control self-assessment principles, regulatory developments, third party service provisions and effective reporting. ·      Development of adaptation plans, which embrace forward-looking analysis and support strategic decision-making, with consideration of relevant business planning, operations, underwriting and investment activities to contribute to a sustainable transition to net-zero targets and provide effective mitigation of climate change related risks. ·      Detailed analysis of climate and other ESG risks, which could cause macroeconomic stresses in future, including impacts to markets, interest rates, inflation and exchange rates. ·      Developing and updating relevant components in relation to the sustainability risk domain, including policies, procedures, risk indicators, management data and stress testing. ·      'In flight' initiatives addressing cultural alignment and structural resilience encompass core ESG considerations.
Employee Engagement and Talent Risk: Arising from any failure to drive and support the right corporate culture and attract, develop, engage and retain key personnel.	'Talent risk' continues to grow in prominence on the operational risk agenda at industry level with persistent challenges linked to attracting and retaining employees across all financial services sectors. The Group's strategy has core dependencies on attracting and retaining experienced and high-performing management and employees and building a strong and sustainable culture, driven by our purpose, our leadership, our performance management regime and our governance principles and objectives. The knowledge, skills, attitudes and behaviours of our employees, and the success with which these attributes shape and define our culture, are central to our success. How we manage the risk: ·      Significant investment in initiatives to address and support cultural change and development, shape strategy and inform tactical solutions. ·      Continuation of our 'Culture Programme' with clearly defined areas of focus under three core pillars, those being: -       High Performance Culture -       Learning Culture -       Environment & Wellbeing   These remain in active progress led by the Executive Committee with oversight by the Board.

 

Further details around financial risks are outlined in note 3 of the consolidated financial statements.

 

 

 

 

Philip Kay

Chair

25 September 2024

CONTENTS

Board of Directors                                                                                                        Page 32

Directors' Report                                                                                                           Page 34

Directors' Responsibilities                                                                                             Page 39

Corporate Governance Report                                                                                        Page 40

Report of the Audit and Risk Committee                                                                         Page 69

Report of the Nominations Committee                                                                            Page 73

Report of the Remuneration Committee                                                                          Page 76

 

BOARD OF DIRECTORS

The Directors serving at the date of approval of this Annual Report and Accounts are as follows:

Philip Kay

Non-executive Chair

Chair of the Nominations Committee. Member of the Remuneration Committee.

 

Philip was appointed as Non-executive Chair with effect from 1 May 2022. He was previously appointed as an Independent Non-executive Director with effect from 3 March 2020. Philip has had a long career in investment banking and investment management. He is Chair of Schroder Japan Trust PLC and a fellow of Wolfson College, Oxford. He is a former Managing Director and Senior Advisor of Credit Suisse First Boston where he ran the firm's global Japanese cash equity business. He is also a former Director of Fidelity Japan Trust PLC, of Schroder Securities Limited and of Smith New Court PLC.

Thomas Morfett

Group Chief Executive Officer & Group Chief Financial Officer

 

Tom was appointed as Chief Financial Officer and executive Director with effect from 17 April 2023 and as Chief Executive Officer with effect from 2^nd August 2024.  He is a Fellow of the Institute of Chartered Accountants in England and Wales, a Fellow of the Institute and Faculty of Actuaries, and holds an MA in Mathematics from Oxford University.

Prior to joining the group, Tom was Financial Controller and Head of Actuarial for the Utmost Isle of Man group of companies, having previously held the same positions for the Quilter International group of companies. He has extensive experience within the Isle of Man life insurance sector including as Appointed Actuary for Canada Life's Isle of Man companies, and roles at Zurich Isle of Man and Royal London Isle of Man. He trained as a Chartered Accountant with Deloitte.

Jose Ribeiro

Senior Independent Non-executive Director

Chair of the Remuneration Committee. Member of the Audit and Risk and Nominations Committees.

 

Jose was appointed as an Independent Non-executive Director with effect from 2 December 2019. He has over 30 years of experience in the financial services industry globally having been a board member in several jurisdictions around the world. Jose is a certified EU actuary with an MBA degree. Jose is the Chair and Independent Non-executive Director of Starr Insurance Companies, Chairman at Yurtle, an MGA and Insurtech operating in the Employee Benefit space and regulated by the FCA in the UK, and Insurance Lead and Guest Lecturer at Imperial College Business School, where he lectures in Risk Management. 

 

Jose started his insurance career with American International Group (ALICO) in 1986 as a Life and Pensions actuary and spent the first 16 years of his career working with subsidiaries of AIG and Munich Re, performing a variety of senior roles (including CEO, Chief Actuary, Pension Fund manager, Regional Director for Employee Benefits) in Europe, the US and Latin America.  Since 2002 Jose has had a variety of roles including CEO for Latin America and the Caribbean at Willis, Director for International Markets at Lloyd's of London where he was responsible for overseeing the Lloyd's trading platforms in China, Japan and Singapore, and Managing Director and Board Member for Asia-Pacific at A.M. Best (Credit Rating Agency). 

 

David Peach

Independent Non-executive Director

Chair of the Audit and Risk Committee. Member of Remuneration and Nominations Committees.

 

David was appointed as an Independent Non-executive Director with effect from 31 December 2020.  David is a Fellow of the Institute of Chartered Accountants in England and Wales and a Fellow of the Association of Corporate Treasurers.  He has a degree in Economics from the University of Warwick. He is a Non-executive Director of IntegraLife International Ltd, IntegraLife UK Ltd, Group Risk Mutual Limited and Manx Development Corporation Limited.

 

After training as an accountant with KPMG, David has had more than 25 years' experience in financial services. He has held board level roles in insurance, banking, trust, and fund management companies across a number of different jurisdictions.

 

 

Marc Polonsky

Non-executive Director

 

Marc was appointed as a Non-executive Director on 26 September 2018, having previously served as an alternate Director to Dr Leonard Polonsky since 26 September 2013. He is managing trustee of The Polonsky Foundation, a UK-registered charity supporting cultural heritage, the arts and humanities education. He is a Retired Partner from international law firm White & Case. 

 

Noel Harwerth OBE

 

Independent Non-executive Director

 

Noel was appointed as Independent Non-executive Director on 23 September 2024. Noel is a highly experienced non-executive director who has sat on a number of boards in a variety of different sectors, including mining and finance industry companies and will bring with her a wealth of knowledge. She currently serves on the boards of One Savings Bank (as Senior Independent Director) and Crown Agents Bank. Prior roles include Chair of the UK Export Finance Agency (until February 2024) and member of the Boards of the UK Department of Business and Trade, Scotia Bank Europe, Standard Life, London Metals Exchange, and Bank of England RTGS/CHAPS Board. From 1998 Noel served as Chairman of Sumitomo Mitsui Bank (Europe, Middle East and Africa) from 2004 to June 2015. From 1998 to 2004, Noel was Chief Operating Officer of Citibank International PLC in London. She was responsible for infrastructure and governance of Europe's first truly pan European bank with branches in 18 countries. Noel was educated at the University of Texas in Austin and holds a Juris Doctor Degree from the University of Texas Law School. She has both US and British citizenship.

 

 

Directors' Report

Financial statements

The Directors have pleasure in submitting their Annual Report on the affairs of the Company and the Group together with the financial statements and the auditor's report for the year ended 30 June 2024. Where the context requires "the Group" means Hansard Global plc and its wholly owned subsidiaries.

Hansard Global plc is the holding company of the Group and has a Premium Listing on the London Stock Exchange. The Company is a limited liability company incorporated and domiciled in the Isle of Man.

Activities

The principal activity of the Company is to act as the holding company of the Hansard Group of companies. The activities of the principal operating subsidiaries include the transaction of life assurance business and related activities.

Principal operating subsidiaries

The following companies are wholly owned subsidiaries of the Company and represent its principal operating subsidiaries at the balance sheet date and at the date of this report. All companies are incorporated in the Isle of Man with the exception of Hansard Europe and Hansard Worldwide. Hansard Europe is incorporated in the Republic of Ireland.  Hansard Europe was closed to new business with effect from 30 June 2013.  Hansard Worldwide is incorporated in The Bahamas.

Company	Business
Hansard International Limited*	Life Assurance
Hansard Europe Designated Activity Company	Life Assurance
Hansard Worldwide Limited	Life Assurance
Hansard Administration Services Limited**	Administration services
Hansard Development Services Limited	Marketing and development services

*     Hansard International Limited has two overseas branches in Labuan and Japan.

**   Hansard Administration Services Limited has a branch in Ireland.

 

Results and dividends

The results of trading of the Group for the year under IFRS are set out in the consolidated statement of comprehensive income on page 94. The consolidated financial statements have been prepared under IFRS. The financial statements of the parent company have been prepared under UK Generally Accepted Accounting Practice ("UK GAAP"), comprising Financial Reporting Standard 102.

Additionally, certain information relating to Own Funds and Risk Based Capital is presented in the "Other Information" section of this report on pages 143 to 145. The Board believes that such information provides additional meaningful information on the financial position and performance of the Group in a particular financial year than that provided by IFRS reporting alone.

Results under IFRS

Profit before tax for the year was £5.3m, compared with a profit for the prior year of £5.9m.

Dividends totalling £6.1m were paid during the year (2023: £5.9m).

Proposed final dividend

The Board has resolved to pay a final dividend of 2.65p per share on 15 November 2024, subject to approval at the Annual General Meeting ("AGM"), to shareholders on the register on 13 November 2024 (with the ex-dividend date being 3 October 2024).  If approved, this would bring the total dividends in respect of the year ended 30 June 2024 to 4.45p per share (2023: 4.45p per share).

In making this decision, the Board has carefully considered its current and future cash flows, the risks and potential impacts introduced by the on-going geopolitical position, global economic conditions, the outlook for future growth and profitability and the views of key stakeholders, including shareholders and regulators. 

 

 

Business review and future developments

A full review of the Group's activities during the year, recent events and future developments is contained in the Chair's Statement on pages 1 and 2, the Chief Executive Officer's Review on pages 3 to 5, and the Business and Financial Review on pages 11 to 21.

Risk management and internal controls

Details of the Group's risk management and internal control processes can be found on pages 22 to 25.  A summary of the principal risks and uncertainties can be found on pages 25 to 30.

 

Corporate governance and corporate social responsibility

The Corporate Governance Report on pages 40 to 68 provides full details on the efforts made by the Group in the areas of corporate governance and corporate social responsibility within the business, including the information required under Rule 7.2.6 of the FCA's Disclosure Guidance and Transparency Rules and is incorporated into the Directors' Report by reference.

 

Audit and Risk committee

The Audit and Risk Committee Report on pages 69 to 72 outline how the integrity of the financial reporting and audit process is overseen and the maintenance of sound internal controls and risk management systems.

Directors' remuneration

Details of Directors' remuneration for the year can be found in the Report of the Remuneration Committee on pages 76 to 82.

 

Directors

Details of Board members at the date of this report, together with their biographical details, are set out on pages 32 to 33.  Except where otherwise noted, all Board members served throughout the financial year and to the date of this report.  Dr Leonard Polonsky maintains the honorary title of President to reflect his role having founded the Group in 1970.

In accordance with the Articles of Association all the Directors will retire at the AGM and, where applicable and eligible, shall seek election or re-election.

Share capital

At 30 June 2024 the Company's issued share capital comprised 137,557,079 ordinary shares of 50 pence each.  As at 30 June 2024 the total voting rights of the Company were 137,557,079.  There have been no changes to the issued share capital and total voting rights during the period from 30 June 2024 until the date of this report.

 

Further details of the issued share capital together with details of authorised share capital and movements during the year are included in note 22 to the consolidated financial statements. The Company has one class of share in issue, ordinary shares of 50 pence each, all of which are fully paid.

 

Each ordinary share in issue carries equal rights including one vote per share on a poll at general meetings of the Company, subject to the terms of the Company's Articles of Association and applicable laws. Votes may be exercised by shareholders attending or otherwise duly represented at general meetings. Deadlines for the exercise of voting rights by proxy on a poll at a general meeting are detailed in the notice of meeting and proxy cards issued in connection with the relevant meeting. There are no restrictions on voting rights or on the transfer of shares.

Substantial shareholdings

 

At 30 June 2024 the Company had been notified of the following holdings in its share capital.

Name	Shares (millions)	% holding
Dr L S Polonsky CBE *	50.8	37.0
Aberforth Partners LLP	20.0	14.6
The Polonsky Foundation	9.9	7.2
Mr M A L Polonsky *	7.8	5.7
Premier Miton Group plc	6.8	5.0

*  Including holdings of spouse

There have been no significant changes in these holdings between the balance sheet date and the date of this report.

Employee Benefit Trust

An Employee Benefit Trust ("EBT") was established in February 2018 for the purpose of providing share-based reward. 

 

During the year, net share awards totalling 463,823 shares were granted to Directors and Executive Committee members, with the awards vesting after 3 years, subject to the rules of the Deferred Bonus Plan. 700,000 shares were purchased during the year and transferred into the EBT, to give a total of 1,257,000 shares held as at 30 June 2024.

Share incentive schemes

Save As You Earn programme

A Save As You Earn share save programme allows eligible employees to have the opportunity of acquiring an equity interest in the Company. The Save As You Earn programme was renewed for a further ten years at the 2017 AGM. 

At the balance sheet date there were no options outstanding (2023: 29,031 options), details of which can be found in the Report of the Remuneration Committee.

Research and development

The Group's development activities focus on bringing new products to market to leverage distribution opportunities.

Information about securities carrying voting rights

The following information is disclosed in accordance with DTR 7.2.6 of the FCA's Disclosure Guidance and Transparency Rules:

·      the Company's capital structure and voting rights are summarised on page 35.

·      details of the Company's substantial shareholders are set out on page 35.

·      an amendment to the Company's Articles of Association and the giving of powers to issue or buy back the Company's shares requires an appropriate resolution to be passed by shareholders.

·      the Company may alter its Articles of Association by special resolution at a general meeting of the Company.

·      the appointment and replacement of Directors is governed by the Company's Articles of Association. The Articles of Association provide that the Directors may be appointed by ordinary resolution of the shareholders or by the Board. The Company must have not less than two, and not more than 12 Directors. Where Directors are appointed by the Board, they may only hold office until the next AGM of the Company where they will be eligible for election. Each Director must then retire from office at each AGM. The Company may remove a Director by ordinary resolution.

Powers of Directors

Subject to the Articles of Association, the Isle of Man Companies Acts 1931 to 2004 and related legislation and any directions given by resolution of shareholders, the business of the Company will be managed by the Board which may exercise all the powers of the Company.

Directors' interests

Directors' interests in shares in the Company and in options granted under the Save As You Earn programme are disclosed in the Report of the Remuneration Committee on pages 76 to 82 together with details of their contractual arrangements with the Group. 

Controlling Shareholder

Dr Leonard Polonsky is the controlling shareholder of the Group. To ensure compliance with independence provisions set out in Listing Rule 6.5.4 a summary of the most recent written and legally binding agreement, dated 22 September 2014, governing his relationship with the Group (the "Agreement") is set out in the Report of the Remuneration Committee on pages 76 to 82.

There were no significant transactions between the Group and Dr Polonsky during the year.

In accordance with Listing Rule 9.8.4 R (14), since entering into the Agreement, the Company has fully complied with the independence provisions included within this Agreement, and, so far as the Company is aware, the controlling shareholder and its associates have also complied with the independence and procurement provisions set out in Listing Rule 6.5.4 during the period under review.

 

Company Secretary

The Company Secretary at 30 June 2024 was Hazel Stewart.

Forward-looking statements

The Chair's statement, the Group Chief Executive Officer's overview, the Business and Financial Review and other sections of this Annual Report and Accounts may contain forward-looking statements about the Group's current plans, goals and expectations on future financial conditions, performance, results, strategy, and objectives. Statements containing the words: 'believes', 'intends', 'expects', 'plans', 'seeks', 'anticipates' and other words of similar meaning are forward-looking. All forward-looking statements involve risk and uncertainty. This is because they relate to future events and circumstances that are beyond the Group's control.

 

As a result, the Group's future financial condition, performance and results may differ materially from the plans, goals and expectations set out in the forward-looking statements. The Company will not undertake any obligation to update any of the forward-looking statements in this Annual Report and Accounts.

Annual General Meeting (AGM)

The AGM of the Company will be held on 13 November 2024 at the Company's registered office.

A copy of the notice of the AGM will be available to shareholders on www.hansard.com together with this Annual Report and Accounts. As well as the business normally conducted at such a meeting, shareholders will be asked to elect or re-elect all Directors. The Directors consider that all the resolutions to be put to the AGM are in the best interests of the Company and its shareholders as a whole and will be voting in favour of them. The Board undertakes to apply the Listing Rules in relation to the re-appointment of the Independent Non-executive Directors. This requires that re-election is by majority of votes cast by independent shareholders as well as by majority of all shareholders.

The Company further confirms that, as required by the Listing Rules, it has an agreement in place with Dr Polonsky as the controlling shareholder and that the Company has complied with the requirements of the agreement throughout the year to 30 June 2024.

Copies of the Letter of Appointment for the Non-executive Directors will be available for inspection at the Company's registered office during normal business hours and the AGM venue 15 minutes prior to the AGM until the conclusion of the AGM.

In accordance with the Group's normal practice, the total number of proxy votes lodged at the meeting on each resolution (categorised as for; against; and votes withheld) will be made available both at the meeting and subsequently on the Company's website.

Political donations

The Group did not make any political donations during the year (2023: £nil).

Adequacy of the information supplied to the auditor

The Directors who held office at the date of approval of this Directors' Report confirm that, so far as each is aware, there is no relevant audit information of which the Company's auditor is unaware, and each Director has taken all steps that he ought to have taken as a Director to make himself aware of any relevant audit information and to establish that the Company's auditor is aware of that information.

Auditor

The Company's auditor, KPMG Audit LLC ("KPMG"), has indicated its willingness to continue in office. The Audit and Risk Committee has recommended that KPMG be reappointed as the Company's auditor. Accordingly, a resolution to reappoint KPMG as auditor to the Company, and to authorise the Directors to determine its remuneration, will be proposed at the 2024 AGM.

Going concern

The Directors have at the date of approving the financial statements, a reasonable expectation that the Company and the Group have adequate resources to operate as a going concern for the foreseeable future, being a period of 12 months from the approval of the financial statements and have prepared the financial statements on that basis.

In making this statement, the Directors have considered the impact on the business of the ongoing geopolitical position and global economic conditions. They have reviewed financial forecasts that include plausible downside scenarios such as reduced levels of new business and higher expenses arising from increased inflation. These show the Group continuing to generate profit over at least the required 12 months from the date of approval of the financial statements and that the Group has sufficient cash reserves to enable it to meet its obligations as they fall due. 

The Directors expect that the acquisition of new business will continue to be challenging in the current climate.  The impact of this however is not immediate to the Group's profit and cash flows and therefore allows for longer term adjustments to operations and the cost base. Long periods of lower new business or lower AuA would be addressed by reducing the cost base and, where necessary, the dividend paid.

The following factors are considered as supportive to the Group's resilience to external market and economic challenges:

·      The Group's business model focuses on long term savings products, a majority of which are regular premium paying products which continue to receive cash inflows regardless of the amount of new business sold. 

 

·      The Group earns approximately a third of its revenues from asset-based income which is not immediately dependent on sourcing new business. 

 

·      New business channels are geographically dispersed and therefore less exposed to specific regional factors. 

 

·      The largest cash outflow associated with new business is commission expenditure which reduces directly in line with reduced sales. 

 

·      The Group has and continues to the date of this report to have, a strong capital position with significant levels of liquidity and cash (as outlined in the Business and Financial Review).

 

·      The Group places the majority of its shareholder assets into conservative, highly-liquid, highly rated bank deposits and money market funds.  These are typically not subject to price fluctuation and protect the Group's assets against potential market volatility. 

 

·      The Group has no borrowings.

Post balance sheet events

There have been no material post-balance sheet events, which would require disclosure in, or adjustment to, these consolidated financial statements.

Longer-term viability statement

In accordance with provision 31 of the UK Corporate Governance Code and Listing Rule 9.8.6, the Directors have assessed the prospects of the Group over a five-year period and have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the period of assessment. 

The Group and its insurance subsidiaries are required to maintain minimum regulatory solvency capital levels based on the size and nature of business written. 

The assessment of prospects is considered over a five-year period as this matches the period over which business plans are considered by the Board.  The Board also considers it a reasonable period in light of rapidly changing regulation, competitive landscape and technology advances and developments.

The Group's business plan and associated scenario modelling includes projections of the Group's profit, capital, liquidity, and solvency. Scenario and stress testing consider the Group's capacity to absorb or respond to potential economic, contract holder activity or operational stresses. These include material investment market declines, interest rate movements, mass surrenders by contract-holders and operational losses.  Reverse stress tests are also considered to provide insight into the level of stress needed to breach regulatory solvency requirements.

The assessment also considered simultaneous multiple adverse impacts that could plausibly occur.  This included a 50% reduction to new business, a 25% reduction in AuA due to market declines and a 15% strengthening of sterling all arising at the same time.  While these stresses produce lower levels of profit, cash, and dividends, none of them produce an immediate risk to the viability of the business.  This allows therefore for compensatory management actions to be taken to secure longer-term viability through for example expense and dividend reductions.

In making its overall assessment, the Board has also considered the principal and emerging risks and associated mitigating strategies which it has identified and outlined on page 25 to 30.  The Directors confirm that they have undertaken a robust assessment of the principal and emerging risks facing the Group.

 

 

Statement of Directors' responsibilities in respect of the Annual Report and the financial statements

The Directors are responsible for preparing the Annual Report and financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare Group and Parent Company financial statements for each financial year.  Under that law they are required to prepare the Group financial statements in accordance with international accounting standards in conformity with the requirements of the Companies Acts 1931 to 2004 and applicable law and have elected to prepare the Parent Company financial statements in accordance with United Kingdom Accounting Standards, comprising Financial Reporting Standard 102 'The Financial Reporting Standard Applicable in the UK and Republic of Ireland' ("FRS 102").

Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Parent Company and of the Group's profit or loss for that period.  In preparing each of the Group and Parent Company financial statements, the Directors are required to:

·      select suitable accounting policies and then apply them consistently.

·      make judgements and estimates that are reasonable, relevant, and reliable.

·      state whether they have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Acts 1931 to 2004 and as regards the group financial statements, UK adopted International Accounting Standards.

·      assess the Group and Parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern.

·      use the going concern basis of accounting unless they intend either to liquidate the Group or the Parent Company or to cease operations or have no realistic alternative but to do so.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent Company's transactions and disclose with reasonable accuracy at any time the financial position of the parent Company and to enable them to ensure that its financial statements comply with the Companies Acts 1931 to 2004. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the Directors are responsible for preparing a Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that comply with that law and those regulations.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website.  Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Responsibility statement of the Directors in respect of the annual financial report

We confirm that to the best of our knowledge: 

·      the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and 

·      the Directors' Report includes a fair review of the development and performance of the business and the position of the issuer, and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

 

By Order of the Board

 

 

Hazel Stewart

Company Secretary

25 September 2024

Corporate Governance Report

Compliance with Companies Acts

As an Isle of Man incorporated company, the Company's primary obligation is to comply with the Isle of Man Companies Acts 1931 to 2004. The Board confirms that the Company is compliant with the relevant provisions of the Companies Acts.

Compliance with the UK Corporate Governance Code 2018 ("the Code")

The Board believes high standards of corporate governance are integral to the delivery of the Group strategy and so the Board maintains a strong commitment to achieving the highest standards of corporate governance. During the year under review, the Group applied the principles and provisions of the UK Corporate Governance Code 2018 ("the Code"). A copy of the Code is available on the Financial Reporting Council website at www.frc.org.uk.

 

The following specific information required in the Directors' Report is included in other sections of this Annual Report and is incorporated by reference:

 

Board leadership and Company purpose.   The Board's overarching role is to promote the Company's long-term sustainable success, to generate value for shareholders and improve customer outcomes by providing simple, understandable and innovative financial solutions.	A Effective and entrepreneurial Board   B Purpose, values, strategy and culture   C Resources and controls     D Stakeholder engagement	Page 45   Page 5   Pages 13-20, 22-30   Pages 41-45, 68
Division of responsibilities   The Board has a clear division of responsibilities between the leadership of the Board and executive leadership of the business.   Committee terms of reference determine the authority of each of the Board's Committees.   Governance arrangements are in place to ensure that the Board and Directors can meet their obligations under the Code.	F Role of the Chair   G Independence and division of responsibilities   H Non-Executive Directors   I How the Board operate	Page 46   Pages 46-47   Page 46   Pages 48-49
Composition, succession and evaluation   The Board, with the support of the Nominations Committee, conducts regular reviews of its composition (and that of its Committees) and leads the process for appointments to ensure plans are in place for orderly succession to both the Board and the Executive Committee.   The Board undertakes an annual review of its effectiveness and that of its Committees to ensure that the Board and its members continue to contribute effectively.	J Appointments and succession planning   K Composition of the Board   L Board evaluation	Page 74   Page 45-46   Page 48
Audit, risk and internal control   The Board, supported by the Audit and Risk Committee, is responsible for establishing appropriate risk management and internal control procedures to ensure that the Group is appropriately managed and that risks are appropriately identified and mitigated in the context of the business as a whole.	M Effective internal and external audit functions   N Fair, balanced and understandable assessment   O Internal controls and risk management	Page 71   Page 84   Page 22-30
Remuneration   The Board, supported by the Remuneration Committee, ensures that the remuneration policies and practices are designed to support strategy and promote long-term sustainable success.	P Alignment of remuneration with strategy, purpose and values   Q Remuneration policy   R Independent judgment, discretion and  performance outcomes	Page 76   Page 77   Page 78

 

 

There are no disclosures to be made under Listing Rule 9.8.4.

 

Other statutory disclosures

 

Directors of the Group	Pages 32-33
Dividends	Page 21
Environmental, social and governance risks	Pages 57-65
TCFD Reporting	Pages 52-68
Future Developments	Page 16
Going concern Statement	Page 37
Post balance sheet events	Page 38
Reporting under Section 172 of the (UK) Companies Act 2006 and engagement with stakeholders	Page 42
Risk Management and Internal Controls	Pages 22-25

 

Details on how we have applied the provisions and principles of the Code to our activities throughout the financial year and to the date of this report are set out in this Corporate Governance Report and in the following reports: the Directors' Report on pages 33 to 38, the Report of the Remuneration Committee on pages 76 to 82, the Report of the Nominations Committee on pages 73 to 75 and/or in the Report of the Audit and Risk Committee on pages 69 to 72.

 

For the year ended 30 June 2024, the Board considers that it has complied in full with the provisions of the Code, other than in respect of provision 36 as further outlined in the Remuneration Report, and provision 11 following the resignation of Christine Theodorovics on 29 February as less than half of the board, excluding the chair, were Independent Non-executive Directors.

Stakeholders

Stakeholders are critical to the Company's long-term, sustainable success. They are our shareholders, employees, regulators, distribution partners, service providers, and the communities in which we operate. This section explains why and how the Company interacts with these stakeholders, as well as the steps it takes to ensure that their interests are considered in the Board's decision making.

As the Company is listed on the Main Market of the London Stock Exchange, it reports on its compliance with the UK Corporate Governance Code on a comply or explain basis. Provision 5 of the UK Corporate Governance Code recommends that the Company report on how the interests of its key stakeholders were considered in board discussions and decision-making, including those matters outlined in Section 172 of the UK Companies Act 2006 (the "UK Act"). While the Company is not domiciled in the United Kingdom, we have chosen to voluntarily report in accordance with Section 172 of the UK Act to demonstrate our commitment to best practice governance and thorough application of the UK Corporate Governance Code.

The tables on the following pages show how the Company and its Board interact with its stakeholders. We recognise that these relationships are the foundation for the Company's long-term viability, which benefits all parties. The Board recognises the significance of upholding a high standard of business conduct and stakeholder engagement, as well as having a positive impact on the environment in which we operate.

We actively engage with our key stakeholders to understand their perspectives and build effective relationships, and our engagement strategy for each stakeholder group is outlined in the tables on the following pages. Aside from stakeholder considerations, the Board recognises its responsibility to consider long-term impacts and the Company's impact on and from wider society and the environment.

The Board monitors performance against strategy and appropriate decision-making by receiving regular updates, both in Board and Committee meetings and through regular Board reports from the CEO, CFO, Executive Committee members, and other senior managers, all of which enable it to make well-informed principal decisions for the Company's and its various stakeholders' long-term success. We define principal decisions as those that are both material to the Group and significant to any of our key stakeholder groups. In making principal decisions, the Board has considered the outcome from its stakeholder engagement as well as the need to maintain a reputation for high standards of business conduct and the need to act fairly between the members of the Company. The Board believes that the Group's decision-making is balanced, and that Hansard's policies and actions meet the Group's obligations.

Section 172: Promoting the success of the Company

The Directors recognise that their overarching duty, both individually and collectively, is to act in good faith and in a manner most likely to promote the success of the Company, as defined in Section 172 of the UK Act, for the benefit of shareholders as a whole, taking into account, among other things:

The likely consequences of any decision in the long term The Board's focus is on ensuring that the Company generates and preserves value over the long term for all its shareholders. The Board's aim is to make sure that decisions are consistent with the strategic objectives of the Company and the long-term success of the Company.

The interests of the Company's employees The Board engages with employees via a variety of mechanisms and forums to ensure that employees interests are considered.

The need to foster the Company's business relationships with suppliers, customers, and others The Board considers customers, suppliers, and other stakeholders, factoring in their needs, feedback, and concerns to make informed decisions that seek to benefit all parties.  This ensures a balanced and sustainable business relationship.

The impact of the Company's operations on the community and the environment The Board's corporate social responsibility ("CSR") strategy focuses on minimising the Group's environmental impact, making a positive contribution to society and supporting our people to make a difference to the environment.

The desirability of the Company maintaining a reputation for high standards of business conduct The Company has four core values that are the foundation of the Company's culture: Integrity, Respect, Quality, and Innovation. These values ensure that the Company maintains a reputation for high standards in all areas of the business it conducts.

The need to act fairly between shareholders of the Company The Board actively engages with shareholders and considers their interests when setting the Company's strategy.

 Shareholders

Shareholders Our shareholders include institutional investors, retail investors, and management, among others.

Why we engage The Board recognises the importance of regularly engaging with shareholders in order to maintain a high level of transparency and accountability, to act fairly, and to inform the Company's decision making and future strategy. The Board is accountable to the shareholders for creating and delivering value through effective business governance.

How we engage The Group places considerable importance on developing its relationships with our shareholders and it aims to achieve this by way of the following regular communication activities:   § regular dialogue with major institutional shareholders, both directly and through the Company's advisers. § Annual General Meetings. § market announcements, corporate presentations, Annual Report and Accounts and other Company information which are available on our website at www.hansard.com   The Chair, the CEO, the CFO, and Committee Chairs are available to meet or correspond with major shareholders to discuss any areas of concern not resolved through normal channels of investor communication.   Arrangements can be made through the CFO, the Company Secretary, or the Company's corporate brokers.   The Board is equally interested in communications with private shareholders and the CFO oversees communication with these investors. All information reported to the regulatory information services is simultaneously published on the Company's website, affording the widest possible access to Company announcements.   The Board receives regular feedback on the views of shareholders on the Company from the Executive Directors after meetings with those shareholders, as well as from reports from the Company's corporate brokers, the Chair and the Senior Independent Director.   There were no significant areas of concern raised during the 2024 financial year.

Employees

Employees We recognise that to meet our Company goals, we need to retain, attract and develop our talent pool, by providing a supportive and safe workplace where our employees can develop and thrive.

Why we engage We understand the importance of engaging with our employees and recognise that the Company culture and our overall remuneration and benefits package can have significant effect on employees. Communication therefore continues to be a key part of our Culture programme. We want our employees to have a voice, feel appreciated for their contribution and to understand their roles within the Company. It's important that our employees are made aware of key business updates and that they can provide feedback on what's important to them. We work hard to meet our employees' needs and to maintain strong relationships that foster a positive workplace culture.

How we engage We actively and regularly communicate with our employees via various mechanisms covering matters such as strategic updates, business performance and culture or any other matters which are relevant to employees. Our employees are also offered opportunities to provide feedback in different ways such as engagement and culture surveys and in team and individual settings. We provide regular training and development opportunities for our employees and make sure they receive regular feedback and recognition, supported via the performance management framework. We strive to provide a supportive and safe and comfortable working environment, as well as competitive wages and benefits. We encourage all our employees to provide feedback to the Board and provide open channels of communication for them to do so. David Peach is the designated Independent Non-executive Director for employee engagement.

Regulators

Regulators These are the governmental or regulatory bodies in charge of overseeing the Company's operations and ensuring compliance with applicable laws and regulations. Each of our regulators is in charge of overseeing various aspects of the Company's operations, including financial reporting and consumer protection.

Why we engage We work with our regulators to ensure that we are compliant with all policies, laws, and regulations. Regular communication with our regulators assists us in identifying potential risks and obtaining guidance on how to mitigate them.

How we engage The Company meets with its regulators proactively to address any concerns, and it establishes regular meetings to ensure that the Company is up to date on any proposed changes. We make every effort to respond to any queries or requests for information from our regulators in a timely manner.

 Distribution Partners

Distribution partners Those who assist the Company in distributing our products to our policyholders. Distribution partners are subject to a rigorous selection process prior to onboarding, and regular monitoring throughout the course of the business relationship.

Why we engage We understand the importance of maintaining positive relationships with our distribution partners in order to ensure that our products reach customers on time and accurately represent our brand.

How we engage All our distribution partners are supported by our regional sales managers, who provide regular training updates on our product range and any relevant regulation changes, as well as discussing new business development opportunities. This is further supported by regular daily contact around sales opportunities or operational queries to ensure that they receive the best service and to ensure they are knowledgeable about all the Company's products and processes.

Service Providers

Service Providers Those upon whose services the Company relies on to provide its products and services, both domestically and internationally.

Why we engage To ensure that the services on which the Company places reliance are delivered to the Company's required standards and timelines.

How we engage We receive regular attestations from service providers and meet frequently to review the performance of services.

Communities

Communities The locations in which the Group maintains its operations, and in which our employees live.

Why we engage We appreciate that we have a responsibility to support our local communities.

How we engage As noted in Corporate Social Responsibility, we encourage our employees to support local causes. We provide funding for a wide range of initiatives via the Green Team, and we provide our employees with dedicated time allowing them to participate in community engagement activities. We partner with local organisations directly where appropriate.

Compliance with the Market Abuse Regulation

To ensure compliance with the Market Abuse Regulation ("MAR"), the Company maintains internal policies, procedures, and controls in respect of market abuse, market manipulation and insider dealing.  A Share Dealing Code is in place which all employees must adhere to. The Company has complied with this Share Dealing Code and MAR throughout the period.

Role of the Board of Directors and its principal Committees

The primary role of the Board is to provide leadership of the Company. The Company is directed and controlled both by its Board of Directors and through systems of delegation and escalation, to achieve its business objectives in accordance with high standards of transparency, probity, and accountability.

 

It achieves these goals by making decisions relating to key areas for the business, by overseeing the activities of the executive team, and by delegating certain matters for resolution through the principal Board Committees, namely the Audit and Risk Committee, the Executive Committee, the Remuneration Committee and the Nominations Committee.

 

The specific duties of the Board are clearly set out in a Schedule of Reserved Powers that addresses a wide range of corporate governance issues and lists those items that are specifically reserved for decision by the Board.

The primary responsibilities of the Board include, but are not limited to:

·      formulation of medium- and long-term direction and strategy for the Group.

·      establishment of capital structure and dividend policy.

·      ensuring the Group's operations are well managed and proper succession plans are in place.

·      review of major transactions or initiatives proposed by management.

·      implementation of policy and procedures to support the governance framework of the Group.

·      regular review of the results and operations of the Group.

·      ensuring that proper accounting records are maintained, and adequate controls are in place to safeguard the assets of the Group from fraud and other significant risks.

·      regular evaluation of Board performance.

·      oversight of the Group's ERM Framework; and

·      decisions regarding the Group's policy on political donations.

The duties of the principal Board Committees are detailed in the relevant terms of reference, which are reviewed annually and are available on the Company's website, www.hansard.com.

Board composition and key roles

At the date of this report the Board comprises the Non-executive Chair, two Independent Non-executive Directors, one Non-executive Director and the Group Chief Executive Officer (who is also the Group Chief Financial Officer).

As required by the Articles of Association, all Board members will offer themselves for election or re-election at the forthcoming AGM.

The Board supports greater transparency regarding the election and re-election of Independent Non-executive Directors. In compliance with the Listing Rules, the Company operates a dual voting structure for any resolutions on the election and re-election of the Independent Non-executive Directors. The results from the AGM votes on any such resolutions, together with other information normally circulated following the conclusion of the meeting, will be disclosed through the Regulatory Information Services following the conclusion of the Meeting. In the event that the majority of independent shareholders are shown to have voted against these resolutions, a further vote will be called after 90 days.

Chair

Philip Kay was appointed the Company's Non-executive Chair with effect from 1 May 2022., As required by the Code, Philip was considered independent upon appointment. The Chair leads the Board within a solid governance framework and ensures that the Board provides effective leadership for the Group including strategy and direction.

 

Group Chief Executive Officer

Graham Sheward was appointed the Group Chief Executive Officer with effect from 10 May 2021 until 1 August 2024, and was succeeded by Thomas Morfett.  As Chief Executive Officer, Thomas leads the senior executive team in the day-to-day running of the Group's business, including execution of the Group's business plans and objectives and communicating its decisions and recommendations to the Board.

The division of responsibilities between the Chair and the Chief Executive Officer is clearly defined and has been approved by the Board. The Chair has no day-to-day involvement in the management of the Group.  The Chief Executive Officer has direct charge of the Group on a day-to-day basis and is accountable to the Board for the financial and operational performance of the Group.

Group Chief Financial Officer

Thomas Morfett was appointed the Chief Financial Officer with effect from 17 April 2023. As Chief Financial Officer, he is responsible for the Group's Finance, Actuarial and Investments functions, and is as a key member of the Chief Executive Officer's Executive Committee.

Senior Independent Director

Jose Ribeiro is the Company's Senior Independent Director. The Senior Independent Director provides a sounding board for the Chair and serves as an intermediary for the other Directors. He is also available to shareholders should they have any concerns that they are unable to resolve through other channels, or when such channels would be inappropriate.

The responsibilities of the Chair, Group Chief Executive Officer and Senior Independent Director are available on the Company's website, www.hansard.com.

Non-executive Directors

Jose Ribeiro, David Peach and Noel Harwerth are considered by the Board to be Independent Non-executive Directors in accordance with the Code definition.  Philip Kay, as Non-executive Chair, was considered independent on appointment.  Marc Polonsky, a Non-executive Director, is not considered to be independent for the purposes of the Code due to close family ties with Dr Leonard Polonsky and representing the Polonsky family shareholding.

 

The Non-executive Directors fulfil a critical role to constructively challenge all recommendations presented to the Board for approval and to provide the benefit of their experience and expertise to manage risk within the Group and enhance delivery of the overall strategy.

 

Board independence

The Board's policy is to appoint and retain Independent Non-executive Directors who can apply their wider knowledge and experiences to their understanding of the Group. The process for appointing new Directors is conducted by the Nominations Committee.

It is the Board's view that an Independent Non-executive Director also needs to be able to present an objective, rigorous and constructive challenge to management. To be effective, an Independent Non-executive Director needs to acquire a sound understanding of the industry and the Company to be able to evaluate properly the information provided.

Each Independent Non-executive Director serves for a fixed term not exceeding three years that may be renewed by mutual agreement and subject to shareholder approval at the AGM. Subject to the Board being satisfied with a Director's performance, independence and commitment, an Independent Non-executive Director may have their terms renewed for up to nine years. Beyond that period, a Director would typically be considered to no longer be fully independent.

A review of the arrangements affecting all Non-executive Directors who served during the year covering the current term of appointment and review of their independence (where relevant) was undertaken by the Nominations Committee. 

The Committee was satisfied that, based on their performance during their time on the Board, Jose Ribeiro, David Peach, and Christine Theodorovics (until 29 February 2024) were, and in respect of Jose Ribeiro and David Peach, remain independent.

Philip Kay, as Chair, was considered independent upon appointment.

Board meeting attendance

The Board meets regularly to determine the Company's strategic direction, to review the Company's operating and financial performance and to provide oversight that the Company is adequately resourced and effectively controlled.

The Company requires Directors to devote sufficient time to the Company in order to perform their duties. If Directors are not able to attend a meeting, they have the opportunity to submit their comments in advance to the Chair or the Company Secretary. If necessary, they can follow up with the Chair of the meeting.

The attendance of the Directors at scheduled Board and Committee meetings of which they were a member held during the year (and the maximum number of meetings that each Director could have attended) were as follows:

 

	Board	Audit and Risk	Nominations	Remuneration
Number of meetings	10	4	4	5
Philip Kay	9/10	n/a	4/4	5/5
Jose Ribeiro	9/10	4/4	4/4	5/5
Marc Polonsky	9/10	n/a	n/a	n/a
David Peach	10/10	4/4	4/4	5/5
Graham Sheward	9/10	n/a	n/a	n/a
Christine Theodorovics*	4/7	0/2	2/3	2/3
Thomas Morfett	10/10	n/a	n/a	n/a

 

^{*Resigned with effect from 29 February 2024}

 

The Chair of the relevant Board or Committee invited other Non-executive Directors to attend meetings of which they were not a member whenever considered appropriate. The CEO/CFO have standing invitations to Audit and Risk Committee meetings and Marc Polonsky attended or partially attended 4 Audit and Risk Committee Meetings, 4 Nominations Committee Meetings and 4 Remuneration Committee meetings.

Board committees

The Board has established standing committees to oversee important issues of policy and maintain such oversight outside the main Board meetings. Each committee operates within defined terms of reference, which can be accessed on the Company's website. The committee positions held by the Directors as at the date of this report are summarised below:

·      Audit and Risk Committee - Chair: David Peach. Members: Jose Ribeiro, Noel Harwerth.

·      Executive Committee - Chair: Thomas Morfett.

·      Nominations Committee - Chair: Philip Kay. Members: David Peach, Jose Ribeiro, Noel Harwerth.

·      Remuneration Committee - Chair: Jose Ribeiro. Members: David Peach, Philip Kay, Noel Harwerth.

The Chairs of the relevant Board Committees are available to engage with shareholders on any significant matters related to their areas of responsibility.

Reports from the Audit and Risk, Nominations and Remuneration Committees are set out in this Annual Report and Accounts, together with a summary of their activities during the year.

The Executive Committee is chaired by the Group Chief Executive Officer and currently meets fortnightly. The Executive Committee has responsibility for the day-to-day management of the Group, and other items as delegated from time-to-time by the Board. In addition to Thomas Morfett, the Executive Committee is currently comprised of Ollie Byrne (Commercial Director), Karen Corran (Head of People and Culture), Angela McCraith (Chief Risk Officer), Alan Canny (replacing Ailish Sherlin from 14 June 2024) (Chief Actuary), Hazel Stewart (Company Secretary), Keith Brown (Head of Sales) and John Whitehouse (Chief Operating Officer).

Board processes

The agenda for each Board and Committee meeting is considered by the Chair or Committee Chair and the papers for each meeting are distributed by the Company Secretary to the Board or Committee members beforehand. As a standard agenda item during the scheduled Board meetings, the Chair and Non-executive Directors meet without the executive Directors present. The Chair maintains regular contact with the Chief Executive Officer and with the Non-executive Directors, outside of Board meetings or calls, in order to discuss specific issues.

 

Board performance review and effectiveness

The effectiveness of the Board is vital to the success of the Group. The Company undertakes a performance review each year to assess the performance of the Board, its Committees, the Directors, and the Chair. The Board engaged Boston Limited to conduct a board performance review in the year. The performance review took the form of a questionnaire, where Directors were required to rate certain aspects of the Board's and Committees' performance. The questionnaire also gave Directors the opportunity to provide comments on areas of focus, which included the structure of the Board, effectiveness of the Board, and committee-specific questions.

The responses to the performance review of the Board and the Committees were collated and analysed by the Chair and the Senior Independent Director. The results indicated that the Board continues to work well and there were no significant concerns among the Directors about the Board's effectiveness. Additional focus will be given to succession planning and initiatives such as diversity and ESG.

As part of the Chair's performance review the Independent Non-executive Directors meet separately under the leadership of the Senior Independent Director who, in turn, engages in reviews with the Chair.

Following these reviews, the Directors have concluded that the Board and its Committees operate effectively. Additionally, the Chair and the Senior Independent Director have concluded that each Director contributes effectively and demonstrates full commitment to his duties.

Remuneration of Directors

The principles and details of Directors' remuneration, as well as the composition and activities of the Remuneration Committee, are contained in the Report of the Remuneration Committee on pages 76 to 82.

Insurance

The Company maintains insurance cover with respect to the liabilities of Directors and Officers within the Group. In addition, qualifying third party indemnity arrangements are in force for the benefit of the Directors within the Group and were in force for the benefit of former Directors of the Group during the year under review.

Board support

Directors are fully briefed in advance of Board and Committee meetings on all matters to be discussed. The Company Secretary is responsible for following Board procedures and advising the Board, through the Chair, on governance matters. All Directors have access to her advice and services.

The Board has adopted a procedure whereby Directors may, in the performance of their duties, seek independent professional advice at the Company's expense if considered appropriate.

Directors of the life companies are required to complete several mandatory training sessions during each year, for example on Anti-Money Laundering responsibilities (provided by the Money Laundering Reporting Officer or an external supplier). Training and support is also provided on any other key topics that the Board feel appropriate in addition to their individual Continuing Professional Development requirements.

 

 

 

Risk management and internal controls

The Board has overall responsibility for the Group's systems of risk management and internal control, and for reviewing their effectiveness. The Board recognises that the governance risk management and internal control arrangements which constitute the ERM Framework are intended to reduce, although cannot eliminate, the range of possibilities which might cause detriment to the Group. Similarly, the ERM Framework cannot provide protection with certainty against any failure of the Group to meet its business objectives, or guard against material errors, losses, fraud, or breaches of laws and regulations. Taking all of these factors into account the ERM Framework is intended to provide reasonable, but not absolute, assurance against material misstatement or losses and / or the breach of any laws or regulations.

The primary responsibility for developing and implementing internal control and risk management procedures covering all aspects of the business lies with the Executive Committee. As part of the reporting processes from the ERM Framework, the Board regularly receives written reports covering all such aspects in addition to overseeing controls and risk management procedures via the Audit and Risk Committee.

Individual managers have primary responsibility for ensuring compliance with Group policies, principles, and compliance obligations within their respective span of control. This includes the identification, evaluation, monitoring, management, and reporting of risks within their areas of responsibility. The substance and form of risk management activities and the quality of their application are regularly reviewed by the Group Risk Forum and objectively analysed and evaluated by the Group's Internal Audit function, with oversight by and reporting to the Audit and Risk Committee, which is ultimately responsible for reporting on the same to the Board.

Processes for identifying, evaluating, and managing the risks faced by the Group have been in place throughout the year under review and up to the date of this report. They are regularly reviewed by the Board, with the assistance of the Audit and Risk Committee.

The Board, through the Audit and Risk Committee, has reviewed the effectiveness of the Company's risk management and internal control systems including financial, operational and compliance controls. 

 

The Board has further undertaken a robust assessment of the principal risks facing the Group, including those that would threaten its business model, future performance, solvency, or liquidity, in accordance with provision 28 of the UK Corporate Governance Code. Additional information on the principal risks and uncertainties faced by the Group, together with steps taken to manage them, can be found within the Principal Risk Report on pages 25 to 30.

Whistleblowing arrangements

The Group has an established Whistleblowing Policy, which is accessible to all employees, with new starters introduced to the Policy and its objectives during induction training. The Policy is designed to ensure the principles of, responsibilities for, and the approach to effective management of whistleblowing are clearly explained and that staff feel empowered and supported to raise concerns, in confidence, where they have a reasonable belief of actual or potential wrongdoing. The Policy recognises that for some individuals raising a concern under the Group's Whistleblowing arrangements may be a daunting or difficult experience and so provides for such concerns to be raised anonymously and/or outside the Management reporting line if preferable, providing for direct access to the Chief Risk Officer or the Chair of the Audit and Risk Committee.

Financial reporting process

The Group maintains a process to assist the Board in understanding the risks to the Group failing to meet its objectives. This incorporates a system of planning and sensitivity analysis incorporating Board approval of forecast financial and other information. Operational management reports monthly to the Executive Committee and Group Risk Forum on a wide range of key performance indicators and other significant matters. The Board receives regular representations from the senior executives. Performance against targets is reported to the Board quarterly through a review of the Group's and Company's results based on accounting policies that are applied consistently throughout the Group. Draft management financial statements are prepared quarterly by the CFO.

 

The members of the Audit and Risk Committee review the draft financial statements for the half year ending 31 December and for the full financial year and engage with the CFO to discuss and challenge the presentation and disclosures therein. Once the draft document is approved by the Audit and Risk Committee, it is reviewed by the Board before final approval by the Board.

Financial reporting

The statement on the responsibilities of the Directors in relation to the preparation of the accounts and the Directors' evaluation of the business as a going concern is contained in the Directors' Report on pages 34 to 38.

 

The Directors as at the date of this report consider that the Annual Report and Accounts, taken as a whole, are fair, balanced, and understandable and provide the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

Culture

The Board believes that strong corporate governance underpinned by a sound culture is fundamental to the success of the Group. It has sought to create an empowering culture, which values innovation, quality, integrity, and respect. The Board helps to ensure appropriate behaviours and culture are instilled throughout the Group, with the tone and expectations continuing to be set from the top. In its decision making, the Board aims to reinforce the Group's values and reflect the culture it wishes to foster.

 

Our Culture Programme continues with an agenda which aligns and supports the delivery of our corporate objectives with areas that are important to our people.  We regularly measure employee engagement via an anonymous inhouse survey.  The results of which are then discussed in open workshops to understand the key areas which are impacting employee experience which then help share our people initiatives.

 

As previously reported, our Culture Programme has three core pillars of focus, those being

 

·      High Performance Culture

·      Learning Culture

·      Environment and Wellbeing

 

We have continued with our commitment to supporting development opportunities for our people, via learning events, professional qualifications, internal promotion, and secondment opportunities. Learning events focussed on high performing teams, resilience and the importance of trust have featured in our learning culture initiatives this year in addition to workshops to further support our population of people managers.

 

Our Wellbeing team continue to play a vital role in terms of providing support and initiatives to our people around three key areas, Mental, Physical and Financial Wellbeing. Our Employee Assistance Programme provides additional support to our people and their families and friends through various life events.  Through a range of Group schemes, which underpin the Mental, Physical and Financial pillars, we stand by our commitment to support the health and wellbeing of our people. 

 

We have a very active Sports and Social team who arrange a wide mix of activities and social events, bringing our people together outside of the workplace.

 

People and gender reporting

We recognise our people are key to our success in delivering the strategic objectives of the business.  Our core values of Innovation, Quality, Integrity, and Respect were defined by our people and underpin our working environment and practices.  We believe all our people can make a difference and we continually work to ensure that they are appropriately developed, engaged, rewarded and retained. The Culture Programme is designed to further enhance the employee experience.

 

The Group's principal administrative operations are performed in the Isle of Man on behalf of the wider Group.  Management of Hansard Europe with certain support functions located in the Republic of Ireland.  Employees of our Malaysian and Japanese branches are included in "Other" below. Regional Sales Managers and related market development resources are principally based in local markets to support IFAs and other intermediaries that introduce business to the Group.

 

As at 30 June the number of the Group's employees (excluding Non-executive Directors) by location was as follows:

 

Location	2024	2023
Isle of Man	146	145
Republic of Ireland	16	20
Other	15	20
	177	185

The gender profile of the Group at 30 June 2024 is split with a total of 86 male and 91 female employees (2023: 94 male and 91 female).  Within the Executive Committee, there were 5 male executives and 3 female executives. Employees reporting directly to members of the Executive Committee comprised 14 male employees and 16 female employees. As at 30 June 2024 the Board comprised 6 male Directors and no female Directors, and the board of the Company's principal operating subsidiary, Hansard International Limited, comprised 6 male Directors and one female Director.

Dr Christine Theodorovics, who was appointed as an Independent Non-executive Director with effect from 23 January 2023, resigned from the Board with effect from 29 February 2024. She had been appointed as CEO of Baloise Luxembourg in the previous year and decided to step down from the Board to focus on this commitment.  Noel Harwerth OBE has been appointed as a replacement. The gender profile across the Group is evenly balanced, with a number of senior executive positions being held by female employees, including Chief Risk Officer, General Counsel and Company Secretary, and Head of People and Culture. Although the current composition of the Board is not in compliance with the Listing Rules requirements on diversity and inclusion, the intention is to appoint a further female Independent Non-executive Director later in the financial year.  Following the changes in our leadership team, the primary focus will be on ensuring stability and continuity in our operations; thereafter, the Company will be able to take further steps in relation to compliance with these Listing Rules requirements.

Corporate Social Responsibility

Hansard has a long-standing commitment to operating in accordance with principles and policies which seek to deliver positives impacts, wherever possible, through its Corporate Social Responsibility (CSR) programs and initiatives. These encompass environmental. social and governance (ESG) perspectives and continue to evolve as the Board anticipates future developments driven by a broader perspective of sustainability.

For the year ended 30 June 2024 our focus has remained on the creation of value for our stakeholders over the long term whilst making a positive impact on the world. To support our continuing efforts and future focus a Group Sustainability Officer was appointed during April 2024 to review our approaches and internal practices in respect of all components of ESG and to progress a review of our pre-existing CSR Strategy, building on the progress we have made to date, to deliver a holistic view of our forward-looking ambitions. This will help to drive continued refinement of our sustainability goals and the associated governance, risk management and internal control arrangements.

In line with these developments our 'Green Team' has continued to promote and actively contribute to ESG-related initiatives throughout the reporting period, with colleagues from across the Group dedicating more than 500 hours of their time to internal and external events, either giving up their own time or utilising Company approved time for volunteering and supporting activities including:

·      Sponsorship of the 2023 'LoveTech' summer event, which aims to encourage girls to enter into STEM careers.

·      Introduction of plastics, cans, and glass recycling bins within our offices to expand our existing recycling activities.

·      Partnering with the Manx Wildlife Trust (MWT), to actively support a number of initiatives, including:

·      Primary donation to Hospice Isle of Man to help fund a solar array to aid with their sustainability transition and reduction in operating costs.

·      Participation in a volunteering day at The Children's Centre, helping with the construction of a Roundhouse and pathway to the Roundhouse.

·      Sponsorship of the annual Shennaghys Jiu Festival, which provides a unique and inclusive platform for the Island's gifted young musicians and dancers and the opportunity for developing local talent to flourish. The Festival also helps to build unique and collaborative relations with talented young people of our Celtic Nation neighbours, extending the Island's cultural reach and reputation beyond our own shores.

·      Volunteering by employees around the business with Junior Achievement Isle of Man, visiting local primary and secondary schools and helping with the delivery of their programmes.

·      Donating to Junior Achievement Isle of Man to support the 'It's All About Money' Programme.

·      Gifting desk plants to employees, promoting the benefits of plants and bringing nature into the office.

·      Sponsorship of tables at a number of local events supporting various charities, including Manx Mencap and Cruse Bereavement Support, Isle of Man.

Concurrently the 'Wellbeing Team' has continued its valuable work, with a dedicated Executive Committee member and a clear mandate that recognises the vital role a positive culture and physical environment, which encourages healthy lifestyle choices, plays in the long-term sustainability of Hansard. The Wellbeing Team strives to promote and support the physical, financial, and mental wellbeing of all staff members across the Group through the Workplace Wellbeing Plan (WWP) and associated initiatives.

Initiatives run by the Wellbeing team, to support employees throughout the year and their endeavours to create a supportive and successful working environment, have included: -

·      Facilitation of a Resilience Code Workshop and 28-day Habit Formation challenge for Isle of Man based employees.

·      Supporting Mental Health Awareness week through:

·      Ice bath session held with InnerAlchemy to promote the benefits of the Wim Hof Method and cold-water swimming.

·      Collaboration with the Green Team in respect of the Summer Food Bank donation.

·      Attendance at the 'Sound Sanctuary' session held at the Santander Work Café.

Climate-Related Financial Disclosures

During the year ended 30 June 2024 we have continued to invest in initiatives supporting the development and expansion of our climate-related financial disclosures. This section explains the Group's ongoing activities to embed climate-related risks and opportunities into our risk management, strategic planning, and decision-making processes.

 

Our reporting seeks to provide both investors and wider stakeholder groups with a clear understanding of our progress during the reporting period in identifying, understanding, and disclosing our exposures to climate related risks and strengthening strategic resilience to these exposures, whilst also seeking out opportunities in the mid to longer term.

 

Whilst we have continued to focus our efforts on climate-related disclosures, we are increasingly conscious of the benefits and value inherent within holistic sustainability perspectives and reporting practices, and the importance of an integrated strategy to achieve our overall goals and ambitions. Aligning our strategic and tactical thinking with the objectives and intent of the Task Force on Climate-Related Financial Disclosure ("TCFD") recommendations is helping to drive an inclusive approach to addressing our social responsibilities as well as our environmental impact and our governance practices.

 

The Group recognises that its work to adopt and embed TCFD recommendations, as well as broader disclosure requirements, remains an iterative process of learning and refinement as we adapt and optimise our plans and tackle the challenges inherent within our journey towards establishing, expanding, and embedding our ESG targets.

 

Introduction and TCFD Report Overview

 

Our TCFD Journey

                                             

In addition to its obligations associated with TCFD a range of other important factors continue to contribute to the Group's TCFD journey and drive positive progress towards our TCFD-related goals and objectives. The Hansard Group is proud to call the Isle of Man home, and we remain proactively committed to supporting the Isle of Man Government's initiatives associated with the sustainability of the Island's future. This includes support for 'Finance Isle of Man' as they progress their work to develop a three-year Roadmap to create a more sustainable economy on the Island, scheduled for launch during November 2024. The Island continues to be designated as a UNESCO Biosphere in recognition of its special environment, culture, heritage, and economy and is the only Biosphere that encompasses an entire nation, which includes all the Island's land and territorial sea, and Hansard remains a UNESCO Biosphere Isle of Man Business Partner, with the pledges made used as drivers in our decision making. As a responsible island nation, the Isle of Man is particularly aware of the local and global impact of climate change and of the social and environmental imperative for action, with the Island committed to reaching carbon neutrality by 2050.

It is against this backdrop that the Group has progressed its work during the 2024 financial year to enhance and embed its approach to the management of climate-related and broader ESG risks under the four pillars of the TCFD recommendations. The Group remains committed to iterative improvements in its disclosures and subsequent reporting arrangements, across short-, mid- and longer-term time horizons for the benefit of the Group's investors and wider stakeholder cohorts. Achieving maturity of both qualitative and quantitative metrics and broadening their scope from carbon-related to climate-sensitive exposures, risks, and opportunities, remains a priority in the near term.

 

Our Approach

 

Climate-related risks and opportunities are an intrinsic element of the Group's broader strategic perspectives. ESG-related risks are defined, at the highest level, as those risks arising from a failure to anticipate and respond to actual or emerging environmental, social and governance threats, challenges or opportunities, or to successfully integrate ESG into the Group's strategic and business planning activities.

Risk mitigations include:

·      Actively building ESG considerations into strategy development and business planning processes through structured analysis, formal assessment mechanisms and cross-functional collaboration.

·      Factoring emerging ESG risk issues into key decision-making and understanding the impacts for the tools and methodologies currently used to manage risk, including governance structures, risk ownerships, risk and control self-assessment principles, regulatory developments, third party service provisions and effective reporting.

·      Developing and updating relevant components in relation to the ESG risk domain - including policies, procedures, risk indicators, management data and stress testing; and

·      Initiatives addressing cultural alignment and structural resilience, which encompass core sustainability considerations.

 

Relevant details of the Group's work during the reporting period are organised under the four pillars of the TCFD disclosure framework, below. Areas prioritised for attention in terms of enhancing the quality and substantive nature of the Group's disclosures, targeted at achieving full compliance with the framework, include disclosures relevant to the environmental impact of our assets under administration, iterative enhancement of the understanding of climate-related risks within our regularly assessed range of risks to the business and the resilience of our Group strategy to various scenarios. A summary of our disclosure report is presented at figure 1 below.